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Business Tenancies

Its been a while since we blogged on business tenancies so here goes.

In Somerfield Stores Ltd v Spring (Sutton Coldfield) Ltd the tenant held a supermarket and adjoining land under three commercial leases which expired in March 2008. The year before the expiry the tenant had served a section 26 notice pursuant to the Landlord and Tenant Act 1954 requesting a new tenancy. However the landlord served counter notices stating that it would oppose the grant of the tenancies under section 30 of the 1954 Act on the ground that the landlord intended to demolish or reconstruct the premises on the termination of the current tenancies. The tenant therefore applied to the court for the new leases.

The Landlord subsequently went into administration but the tenant was granted permission to continue with the proceedings and applied for summary judgement against the landlords ground of opposition. Initially the tenant’s application was refused but the tenant was granted permission to appeal.

At appeal the landlord contended that the date at which the landlord’s intention to demolish or reconstruct must be shown to exist is the date of the substantive trial of the landlord’s ground of objection, not the hearing of the application for the summary judgement. The tenant contended that the hearing of the summary application would establish whether the landlord had a real prospect of establishing a cause of action or defence at a future trial date not whether or not the intention exists.

The court held that the summary judgement would deal with the finding of fact only, that is whether the landlord intended to rebuild or not and you can not do this effectively using the summary judgement procedure. When a fact is contested the parties are usually cross examined but a summary judgement application is done on paper and as such the facts are going to be difficult to establish. Therefore the intention will not be established at the summary hearing and a further hearing will no doubt be required.

It was therefore in the courts view that the date at which the intention had to exist was the date of the trial. At a substantive trial evidence can be tested and facts found for the purpose of a final determination one way or the other of the landlord’s ground for opposition.

The logic behind this decision makes perfect sense from a litigation point of view. If the tenant was permitted to continue with the summary application as claimed this would simple raise costs for what is already a costly process and could no doubt result in tenants attempting to use this in order to force landlords to settle.

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