TFS Stores Ltd v The Designer Retail Outlet Centres (mansfield) General Partner Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Males,Lord Justice Arnold,Lady Justice King |
| Judgment Date | 14 May 2021 |
| Neutral Citation | [2021] EWCA Civ 688 |
| Docket Number | Case No: A3/2019/2049 |
| Court | Court of Appeal (Civil Division) |
| Date | 14 May 2021 |
[2021] EWCA Civ 688
Lady Justice King
Lord Justice Males
and
Lord Justice Arnold
Case No: A3/2019/2049
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
PROPERTY, TRUSTS AND PROBATE LIST (Ch)
HHJ Davis-White QC (sitting as a judge of the High Court)
Royal Courts of Justice
Strand, London, WC2A 2LL
Joanne Wicks QC & Mark Galtrey (instructed by DLA Piper UK LLP) for the Appellant
Wayne Clark & Joseph Ollech (instructed by Shoosmiths LLP) for the Respondents
Hearing date: 29 th April 2021
Approved Judgment
Part II of the Landlord and Tenant Act 1954 provides security of tenure for tenants of business premises, but permits the parties to contract out of such security if certain conditions are met. Those conditions, in short, are that (1) the tenancy is “for a term of years certain”, (2) the landlord has served a “Warning Notice” in the form, or substantially in the form, prescribed, and (3) the tenant has made a simple declaration (or in some cases, a statutory declaration) in the form, or substantially in the form, prescribed, stating that it has received the Warning Notice and accepts its consequences. The prescribed form of declaration contains spaces for the insertion of the name of the declarant, his address, the address of the premises and the date on which the term will commence. The issue on this appeal is whether the way in which this last entry (“for a term commencing on …”) was completed in the case of six leases concluded between November 2008 and July 2017 meant that the declarations were not “in the form, or substantially in the form” prescribed, with the consequence that the parties' purported contracting out from the security of tenure provisions of Part II of the 1954 Act was void.
HHJ Davis-White QC, sitting as a judge of the Chancery Division, held that the various formulae used by the tenant did not invalidate the declarations. They fulfilled the statutory purpose, which was to identify the tenancy in respect of which a Warning Notice had been given so that the tenant confirmed by the declaration that it understood that the proposed tenancy would be excluded from the protection of the 1954 Act, and were either in the prescribed form or substantially in that form. The tenant now appeals, contending that the judge was wrong so to hold. There were other issues with which the judge had also to deal, but we are not concerned with those.
Background
The tenant in each case, either as the original tenant or by assignment, is TFS Stores Ltd, a company incorporated in January 2009 which trades in fragrance products through about 200 retail stores. The various landlords are nominees of an investor group which owns designer outlet shopping centres.
The leases with which we are concerned were for retail units at Bridgend, Mansfield, Swindon, Ashford, Cheshire Oaks and York. In each case the parties agreed to contract out of the security of tenure provided by Part II of the 1954 Act. Each lease contained a clause agreeing to exclude the protection of Part II of the 1954 Act and confirming that, before the tenant became contractually bound to enter into the lease, the landlord had served a Warning Notice and the tenant had made a statutory declaration.
In three cases, Bridgend, Mansfield and Swindon, the lease was preceded by an agreement for lease. In the remaining cases, there was no agreement for lease and the parties proceeded straight to a lease.
Mansfield and Bridgend
In the cases of Mansfield and Bridgend, non-binding heads of terms were agreed in May 2007, for terms of 10 years, calculated from the handover date for the tenant to commence fitting out of the unit, although the leases themselves were not executed until some time later. Rent was to be payable from the later of 1 st September 2007 or three weeks after the handover date.
In both cases the landlord served a Warning Notice in the correct form and the tenant made a statutory declaration before the agreement for lease was signed. The declaration stated that the term would commence on “the Access Date under the Agreement for Lease pursuant to which the tenancy of the premises will be entered into”.
The agreements for lease were concluded in November 2007. The “Access Date” was defined as being 5 th November 2007 (for Mansfield) and 12 th November 2007 (for Bridgend). From the Access Date until the grant of the lease the tenant was given a licence to occupy the premises for the purpose of completing certain works and trading from the premises.
The leases were not granted until some time later, 5 th November 2008 (Mansfield) and 26 th August 2009 (Bridgend). The term was expressed as being for 10 years commencing on 4 th and 12 th November 2007 respectively (i.e. commencing in each case on the “Access Date”).
Swindon
The Swindon lease was preceded by an agreement for lease dated 13 th November 2014, with an “Access Date” of 10 th November 2014. It provided for a term of 10 years commencing on the Access Date. As with Mansfield and Bridgend, from the Access Date until the grant of the lease the tenant was given a licence to occupy the premises. The lease itself was dated 10 th February 2015. A Warning Notice was served by the landlord prior to the agreement for lease. The statutory declaration made by the tenant on 6 th November 2014 stated that the lease would be “for a term commencing on a date to be agreed between the parties”.
Ashford, Cheshire Oaks and York
The Ashford, Cheshire Oaks and York leases were each dated 14 th July 2017. Warning Notices were served by the landlord on 16 th June 2017, 27 th June 2017 and 24 th May 2017 respectively, which in each case was more than 14 days before the execution of the lease. In each case the tenant made a statutory declaration, for Ashford and Cheshire Oaks on 30 th June 2017 and for York on 26 th May 2017. Each declaration stated that the lease would be “for a term commencing on the date on which the tenancy is granted”.
The legislation
Part II of the 1954 Act has been amended from time to time. I set out now the current provisions which apply in this case. I will then describe the background to the changes which resulted in the current form of the legislation.
The basic rule prohibiting contracting-out from the security of tenure provided by Part II is contained in section 38(1) of the Act:
“Any agreement relating to a tenancy to which this Part of this Act applies (whether contained in the instrument creating the tenancy or not) shall be void (except as provided by section 38A of this Act) in so far as it purports to preclude the tenant from making an application or request under this Part of this Act or provides for the termination or surrender of the tenancy in the event of his making such an application or request or for the imposition of any penalty or disability on the tenant in that event.”
Section 38A, effective from 1 st June 2004, provides the exception to this basic rule:
“(1) The persons who will be the landlord and the tenant in relation to a tenancy to be granted for a term of years certain which will be a tenancy to which this Part of this Act applies may agree that the provisions of sections 24 to 28 of this Act shall be excluded in relation to that tenancy.
(2) …
(3) An agreement under subsection (1) above shall be void unless—
(a) the landlord has served on the tenant a notice in the form, or substantially in the form, set out in Schedule 1 to the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 (‘the 2003 Order’); and
(b) the requirements specified in Schedule 2 to that Order are met. …”
The first condition which must be satisfied for an agreement to contract out of security of tenure to be valid is that the tenancy is “for a term of years certain” (subsection (1)). All of the leases in issue in this case satisfied that condition.
The second condition is that the landlord has served a notice in the form, or substantially in the form, prescribed, referred to by the judge as a “Warning Notice”. The form of Warning Notice, set out in Schedule 1 to the 2003 Order, is as follows:
FORM OF NOTICE THAT SECTIONS 24 TO 28 OF THE LANDLORD AND TENANT ACT 1954 ARE NOT TO APPLY TO A BUSINESS TENANCY
To:
………………………………………………………………………………………… ………………………………………………………………………………………… …………………………………..[ Name and address of tenant]
From:
………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………[ Name and address of landlord]
IMPORTANT NOTICE
You are being offered a lease without security of tenure. Do not commit yourself to the lease unless you have read this message carefully and have discussed it with a professional adviser .
Business tenants normally have security of tenure — the right to stay in their business premises when the lease ends.
If you commit yourself to the lease you will be giving up these important legal rights .
• You will have no right to stay in the premises when the lease ends.
• Unless the landlord chooses to offer you another lease, you will need to...
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