02/06/2021
To ensure that a tenant will not have security of tenure under the Landlord and Tenant Act 1954, it is vital that the landlord follows the correct procedure by serving a warning notice on the tenant to advise them of this. This notice is acknowledged and accepted by the tenant either by signing a simple declaration or swearing a statutory declaration, depending on whether the tenant has been given more than 14 days or less than 14 days’ notice before the lease is to be completed.
This may sound straightforward enough, but problems arise when the commencement date of the lease is not known at the time the notice is served. This information has to be included in the declarations made by the tenant, so what happens when the exact date cannot be specified or is dependent on future events, such as the completion of works? This particular conundrum has now been clarified by the Court of Appeal in the recent case of TFS Stores Ltd v Designer Retail Outlet Centres (Mansfield) General Partner Ltd [2021].
Facts of the case
The Fragrance Shop (TFS) claimed that six of its shop leases were protected tenancies under the Landlord and Tenant Act 1954 (LTA 1954) despite the fact that the landlord had served warning notices and TFS had sworn statutory declarations confirming that the leases would be outside the LTA 1954. The contracts did not specify commencement dates, but instead included provisions detailing when completion of the six leases would take place as follows:
- “The Access Date under the Agreement for Lease” (completion would take place on the date the tenant went into the premises)
- “A date to be agreed between the parties” (which was documented in an agreement for lease)
- “The date on which the tenancy is granted” (the term would commence when the leases were completed)
One requirement for the declarations is that they have to be in the form or substantially in the form as stipulated by the LTA 1954. TFS argued that because the statutory declarations required a commencement date in order to be valid, the details provided by the landlord did not comply and therefore the contracting-out process was void. The High Court did not agree and held that the wording did not invalidate the declarations as it was sufficiently clear when the leases would commence. TFS appealed to the Court of Appeal.
The Court of Appeal upheld the decision of the High Court and agreed that the formula used to identify the term commencement date was valid. Although the prescribed form of both declarations each have a blank space where the term commencement date has to be inserted, this does not mean that the actual date has to be added. Provided the date can be ascertained through a method which sufficiently identifies it, then this will comply with the LTA 1954.
Bearing in mind that there is no requirement for the tenant to serve the declaration on the landlord at all, the Court took the view that if only one technically correct date can be included in the declaration then this would be unfair on the landlord – if the tenant includes the wrong date (inadvertently or otherwise) it would impose all the risk on the landlord.
Practical points
A decision on this point is definitely welcome as although the wording in this case is commonly seen, it has never been tested. This case confirms that formulations of this type, for example contained in an agreement for lease or where the term commencement date will be the lease completion date, are valid. The Court took a sensible view and highlighted that the reason the LTA 1954 refers to the declaration to be “in the form, or substantially in the form” prescribed, allows for the declaration to be completed to take into account the various scenarios commonly encountered with business leases.
Although the Court pointed out that there is no stipulation that either type of declaration has to be served on the landlord, a well-advised landlord will insist on receiving the declaration as evidence that the tenant is aware of what it is signing up to. In practice, the landlord will send the form of declaration to the tenant at the same time as it serves the warning notice and care still needs to be taken when completing the commencement date – it has to be sufficiently clear how the date will be calculated in the future.
Tenants will not be able to use the lack of a specific date as a reason to claim they have security of tenure – landlords can now breathe a huge sigh of relief!
For more information on this topic, please contact David Hobbs, Partner.
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