Commercial Property: Looking Backwards at 2014

Mar 25, 2015
2014 was a good year for landlords. The Court of Appeal in Siemens Hearing Instruments Ltd v Friends Life Ltd confirmed the common law rule that there must be strict compliance with the notice requirements when a tenant seeks to exercise a break option. In that case, a technical defect in a break notice was held to make the notice ineffective. The notice itself failed to include some meaningless words which were nevertheless required by the lease to be included in the notice.

Apportionments of Rent
In a further victory for landlords the Court of Appeal in Marks & Spencer PLC v BNP Paribas Security Services Trust Co (Jersey) Limited confirmed the common law position in relation to apportionments of rent when a lease is broken. The Court of Appeal confirmed that rents payable in advance are not apportionable, such that there could be no implied term in a lease to allow a tenant to recover rent paid in advance for a period after the break date. The case is due to go to the Supreme Court sometime this year.

Rent for Administration Purposes
However, there was a mixed result for landlords following the Court of Appeal decision in Jervis v Pillar Denton Limited which determined that administrators must pay rent for occupying properties solely for the purpose of an administration. However, if the rent is payable quarterly and the administrators cease using the premises before the next quarter day they will not have to pay the whole quarter’s rent as an expense of the administration. So, landlords will not have it all their own way with regard to apportionment of rents.

Anti-Social Behavior

On a more positive note for tenants of residential premises, two decisions of the Supreme Court for possession proceedings held that a breach of covenant against anti-social behaviour is capable of being remedied such that the tenant should therefore be given notice before the landlord takes the statutory steps to terminate the agreement and seek possession.

Authorised Guarantee Agreements
Finally, there came the important case relating to Authorised Guarantee Agreements. In Tindall Cobham 1 Ltd v Adda Hotels and others, the Court of Appeal decided that a condition in a lease which required the tenant to procure a repeat (parent) guarantee when the tenant assigns to intra-group companies was valid. The importance of this case for landlords is that it preserves capital values, particularly for funding, if the proposed assignees are shell companies.

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