The Practical Lawyer

A new pre-action protocol will apply to debt proceedings against individuals (including sole traders) from 1 October 2017. In practice, this will make it more time consuming for Ls to recover rent arrears owed by individual Ts.

If a business T remains in occupation at the end of its contractual tenancy, then it will have a statutory ‘continuation’ tenancy under s24 LTA 1954. This is a common law tenancy on the same terms as the previous tenancy, but with the right to apply to the court for a renewal tenancy.

A recent case involved a surrender of a lease and sub-lease. But, L had charged his freehold and the consent of L’s mortgagee was not obtained. The end result was that the surrender was ineffective. Thus, T (and its guarantor) remained liable.

This is a perennial question: how do you tell a lease from a licence? The starting point is to say that no factors are conclusive but:

Factors indicating a lease:

AppearHere is an online market place linking Ls who have available temporary space with potential occupiers (in essence, Airbnb, but for retail space). All L needs to do is fill in a form online to list available space, and then enter into a licence agreement (provided by AppearHere) if a suitable occupier is found.

L may want to carry out works to other parts of the building, but yet find that T complains that the disturbance is a breach of T’s entitlement to ‘quiet enjoyment’.

Minimum Energy Efficiency Standards mean that Ls with properties with an EPC rating of less than ‘E’ will have to carry out works to improve the energy performance of the building in order to let, or continue letting, the building.

L successfully brought possession proceedings against T. Having done so, L then started a new claim to recover mesne profits. T responded by arguing that both claims were based on the same cause of action (ie trespass), and that the first action (ie for possession) effectively extinguished that cause of action (under the doctrine of merger). In effect, T says L has already got judgment, and that any subsequent claim is merged with the original claim, and so must be struck out.

The High Court has clarified the rules on service of notices (under LTA 1954) by sub-Ts requesting a new lease.

If a business is being sold, especially following insolvency, it is not unusual for the parties to agree that the prospective assignee applies to L for consent to assign. If there has been insolvency, the administrators will want to drop out of the picture as soon as possible to save on costs, and in practical terms the buyer will be best placed to deal with the application.