Commercial landlords and tenants should take note of last week's Court of Appeal decision in Harmohinder Singh Gill v Lees News Limited, which touches significantly on the law regarding when a landlord can oppose the grant of a new tenancy to its tenant in lease renewal proceedings under the Landlord and Tenant Act 1954 due to the tenant's (a) failure to meet its repair obligations under the lease; (b) persistent delay in paying rent; and / or (c) substantial breaches of the lease or any other reason connected to the tenant's use or management of the property. Industry professionals will likely be aware that those are three of the seven grounds on which a commercial landlord can oppose the grant of a new tenancy to its tenant, and it is rare for an appellate court to pass judgment in relation to them (cases are more common in relation to the landlord's right to oppose a request on the grounds that it wishes to either re-develop the property or occupy the property itself).
To recap briefly on the legal context to this case: should a commercial landlord wish to oppose the grant of a new tenancy to its tenant, it can only do so on one of the 7 grounds listed in section 30(1) of the Landlord and Tenant Act 1954, and the landlord has only one chance (in either a section 25 notice to terminate the current tenancy or a counter-notice served in response to a tenant's request for a new tenancy) to state on which ground(s) of opposition it will rely.
In Lees News, the Court of Appeal confirmed two key points with binding authority:
(1) if by the time of the hearing the tenant has complied with its obligation to repair / maintain the premises, the court can still take into account the tenant's previous failure(s) to meet its repair obligations under the lease – "If the tenant has a lamentable record of performance and only puts things right at the last minute that is, in my judgment, something that the court can legitimately take into account" (LJ Lewison, paragraph 39); and
(2) In deciding whether or not to force the landlord to grant a new lease to the tenant, the court will consider the matter from the perspective of both the landlord and the tenant by assessing, cumulatively, the tenant's conduct relating to each ground relied on by the landlord in opposition to the grant of a new tenancy. This means that a range of instances of the tenant's poor conduct, which (if taken on their own) might be considered trivial, should be considered together by the court in making a value judgment regarding whether the tenant "ought" not to be granted a new tenancy against the landlord's will.
