On the Ninth day of Christmas – George Cohen

On the Ninth day of Christmas… George Cohen from Irwin Mitchell’s Real Estate Disputes team considers a landmark case providing welcome clarification on when a landlord can terminate a Landlord and Tenant Act 1954 tenancy for a tenant’s breaches of a lease.

Termination of a Commercial Tenancy on the Grounds of Disrepair and Delays in Paying Rent 

Gill v Lees News Ltd [2023] EWCA Civ 1178

The Court of Appeal has re-examined the considerations for terminating a commercial tenancy on Grounds (a) - (c) of section 30 of the Landlord and Tenant Act 1954. Those Grounds are as follows:

(a) where the tenant has failed to comply with repair and maintenance obligations, the tenant ought not to be granted a new tenancy because of the state of repair of the property 

(b) the tenant ought not to be granted a new tenancy in view of their persistent delay in paying the rent

(c) the tenant ought not to be granted a new tenancy because of other substantial breaches of their obligations under the tenancy agreement, or for any other reason connected with the tenant’s use or management of the property

Background

The landlord sought to bring the tenant’s lease to an end by serving a Section 25 termination notice, relying on grounds (a) – (c). At the time the landlord’s notice was served, the tenant had delayed in paying the rent, and there was severe disrepair at the property. However, the tenant had cleared the arrears and undertaken significant repair works during the court proceedings. By the time of the trial, the property was in reasonable repair, and the tenant assured the court that the delays in paying rent were due to financial difficulties, which had subsided.

The court had to decide whether, for each of the three grounds (a) – (c), the tenant “ought” not to be granted a new tenancy. For ground (a), a particular question was whether it could be taken into account that the disrepair had been remedied by the time of the trial, or whether the court could take into account the history of disrepair.

Decision

The Court of Appeal decided that ground (a) allows the court to consider past instances of disrepair when deciding whether the tenancy ought to be terminated. If the tenant has remedied the disrepair by the time of the hearing, this will be a relevant factor. However, landlords should not be obliged to enter into a new tenancy in circumstances where there has been an unreasonable history of disrepair.

Another important point made by the court was that where more than one ground is relied on by the landlord to terminate a commercial tenancy, the grounds should be considered individually or together. The impact of this is that a tenancy can be terminated if any one of the grounds is sufficient to justify ending the tenancy; or all of the grounds together comprise such justification, even if any one of the grounds provides insufficient reason to terminate the tenancy alone.

Impact

In this case, the landlord lost the appeal, because the grounds relied on were not sufficient to justify terminating the tenancy. However, the decision will be welcome to landlords who now have clarification on the considerations for terminating a tenancy on grounds (a) to (c).