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Landlord’s Ability to Refuse Grant of a Renewal Lease

Landlord and Tenant Law

The Court in the case of Horne & Meredith Properties Limited v Cox has ruled that persistent litigation brought by a Tenant against their Landlord can constitute grounds for refusing to grant a renewal lease upon expiry of the tenant’s commercial lease.

Tenants of commercial premises, upon expiry of their lease, have a statutory right to be granted a renewal lease by their Landlord, and can be entitled to compensation if the Landlord refuses to do so dependent upon the “ground” relied upon by the Landlord for the refusal.

Ground C (contained in s30 Landlord and Tenant Act 1954) states that the “…Tenant ought not to be granted a new tenancy in view of other substantial breaches by him of his obligations under the current tenancy, or for any other reason connected with the Tenant’s use or management of the holding” (emphasis added).

In the above case the Tenants had over a period of 16 years persistently pursued litigation in relation to rights of way and parking at the leased property. The Landlord asserted that this litigation had resulted in the complete breakdown of the relationship between Landlord and Tenant and was therefore sufficient to satisfy the second element of Ground C.

The Court agreed with the Landlord that Ground C could be interpreted widely and the two limbs could be considered in isolation. Therefore the Tenant’s consistent pursuit of litigation was sufficient for this ground to be made out, notwithstanding the fact that there had been no breaches of covenant on the Tenant’s part.  In light of this decision and the fact that successful use of Ground C does not result in compensation being payable to the Tenant, Landlords may give further consideration to relying on this ground in the future.

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Jacqueline Penfold
Jacqueline Penfold
Tina Ripley
Tina Ripley