The tenant initiated the lease renewal process by serving a Section 26 Request on the landlord requesting a new tenancy of the premises. The landlord served a counter-notice opposing the renewal on Ground (g) (contained in section 30(1) of the LTA 1954), stating that the landlord intended to occupy the premises for the purpose of running its own business.

An order to terminate the tenancy was granted by the judge on the grounds that the landlord had a firm and settled intention to open a Japanese restaurant called Zen Bento and that the landlord had reasonable prospects of achieving this intention within a reasonable timeframe and had given an undertaking to commence trading as Zen Bento as soon as reasonably practicable after obtaining vacant possession.

Following receipt of the order terminating the tenancy, the landlord did not open a Japanese restaurant called Zen Bento but instead opened a different restaurant and bakery at a later date. As a result of this, the tenant issued a claim for deceit and for compensation under section 37A of the LTA 1954 arguing that the order terminating the tenancy was obtained by misrepresentation. The claim for deceit failed, however the High Court found that the landlord did mislead the court as to its intention to occupy the premises because at the time that it gave its evidence, it did not have a firm and settled intention to open a Japanese restaurant called Zen Bento. The order terminating the tenant’s tenancy was therefore found to have been obtained by misrepresentation pursuant to section 37A of the LTA 1954.

Accordingly, the landlord was liable to pay compensation to the former tenant under section 37A of the LTA 1954. The amount due is still awaiting determination.

This decision will be welcomed by tenants as it strengthens a tenant’s prospects of obtaining redress in circumstances where a landlord has misrepresented its position. It also reinforces the importance of having a firm and settled intention to occupy the premises at the date of the hearing and the requirement for landlords to follow through with their obligations to implement their plans within a timely manner. Specific undertakings should not be provided where a landlord is unsure of its future plans.

Given the complex nature of opposed lease renewals, it is essential that both landlords and tenants are properly advised throughout the process. To ensure you navigate your lease renewal successfully, you can call on the experience of our Property Litigation team who have acted on thousands of lease renewals for clients nationwide over many years.

Get in touch with the author, Lauren Casey, on 01482 324252 or via email, lauren_casey@gosschalks.co.uk