Discretion of Lands Tribunal to Decide Certain Renewal Lease Terms

17 June 2015

David Wilson, Partner, considers the discretion of the Lands Tribunal to determine certain renewal lease terms in circumstances where a Landlord and Tenant cannot agree

In circumstances where a Landlord and Tenant cannot agree terms of a renewal lease and the matter has been referred to the Lands Tribunal for determination, Article 19(1) of the Business Tenancies (Northern Ireland) Order 1996 provides that in the absence of agreement between the parties the Lands Tribunal shall have a wide discretion to settle any matters (except rent and duration) with regard to the existing terms and to all relevant circumstances.

The Lands Tribunal recently heard an application brought by Applicants called Edward Teague and Patricia Teague, Landlords of premises situated at 19 Market Street, Ederney. The Lease granted to tenant John Corry was due to expire on 31st December 2010 and as early as February 2010, the Landlords served notice on Mr Corry giving notice to determine the tenancy. We do not know whether any details were furnished as to why the Landlords did not wish to renew the tenancy. In any event, the Tenant said he did not accept the notice to determine as he wanted to remain in the premises and informed the Landlords that he would be applying for a new tenancy. Under the Business Tenancies (Northern Ireland) Order 1996, a tenant is able to apply to the Lands Tribunal by making a referral known as a “tenancy application” pursuant to Article 10 of the 1996 Order.

After initially objecting to the Tenants request for a new tenancy, the Landlords reluctantly accepted that they would grant a new lease to the Tenant and the matter was considered by the Lands Tribunal as to what terms would be contained within the new Lease.

The parties agreed to enter a new five year lease term from 1st January 2011 upon very similar terms to the existing lease save that the Landlords wanted a slight amendment to ensure they could carry out periodic inspection of the premises. This right had not been reserved in the original Lease and the Landlords wanted the right for them or their agents; firstly, to inspect the property every six months at reasonable times giving one week’s prior notice, save in the case of an emergency to ensure the Tenant is complying with the covenants and conditions of the Lease and; secondly, a similar right to inspect every six months at reasonable times giving one week’s prior notice, save in the case of an emergency to view the state and condition of the premises.

The Tenant was not happy with this alteration from the original terms and considered it to be onerous and suggested that he would only be prepared to allow the Landlords “suitably qualified agents to enter upon the demised premises once a year between the hours of 9.00am and 10.00am and giving one week’s written prior notice (except in case of emergency) to review the state of repair and condition of the demised premises and for the purpose of ascertaining that the covenants and conditions of this lease have been observed and performed. The person or persons exercising such rights causing as little disturbance or inconvenience to the tenant as possible and making good at his or their expense any damage thereby occasioned to the demised premises.”

The case of Card Shops Limited v Davies [1971] 1WLR 591 was cited as the case which lays down the precedent that the party seeking changes to a lease must be able to justify those changes and the Tribunal did not think the Landlord could reasonably justify the need to require inspection facilities every six months and every twelve months was considered reasonable in the circumstances.

In addition, the Tribunal did not think it necessary to “… to open up floors and ceiling where the same is required in order to view the state of repair and condition of the premises or the retained parts”.

In terms of who has the right to inspect, the Tribunal decided that it would be unfair to expect the Landlords to pay an agent to carry out an inspection and although it was surmised that notwithstanding the fact that the relationship between the Landlord and the Tenant was far from harmonious, the Landlords had a personal right to inspect.

The Tribunal therefore limited the Landlords’ inspection facilities to once a year, upon given one week’s prior notice (except in the case of an emergency) at a mutually convenient time to view the state or repair and condition of the demised premises and for thepurpose of ascertaining that the covenants and conditions of this lease have been observed and performed, the person or persons exercising such rights causing as little disturbance or inconvenience to the tenant as possible and making good at his or their expense any damage thereby occasioned to the demised premises.

This case is a good example of how the Lands Tribunal has a wide discretion to determine the terms of a renewal lease where the parties cannot agree.

David Wilson is a Partner specialising in the Commercial Department of Worthingtons and can be contacted on 02890 279071.

 

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