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Termination of business tenancies

Zoe Youssefi v Joan Mussellwhite [2014] EWCA Civ 885

In the recent case of Zoe Youssefi v Joan Mussellwhite [2014] EWCA Civ 885, in which Lamb Chambers’ James Browne represented the successful Respondent landlord, the Court of Appeal has usefully clarified the approach to be taken by the court when deciding whether a new business tenancy “ought not to be granted” under s.29(4) of the Landlord and Tenant Act 1954 (“the Act”).A main issue on appeal was whether the “ought not to” test required the court to find that a landlord had suffered ongoing prejudice, especially financial prejudice, before refusing to grant a new tenancy.

Pursuant to s.30(1)(a) of the Act, the court must determine whether “in view of the state of repair of the holding”, caused by the tenant’s failure to repair and maintain, the tenant “ought not to be granted a new tenancy”. The Court of Appeal held that in answering this question, the court must focus exclusively on the state of repair of the holding. Accordingly, the court also had to determine whether, looking ahead to the hypothetical new term, “the proper interest of the landlord would be prejudiced”, by continuing in a landlord/tenant relationship with this particular tenant. Alternatively stated, whether it “would be unfair to the landlord, having regard to the tenant’s past performances and behaviour in relation to its obligation to repair and maintain the holding, if the tenant were to be “foisted on the landlord for a new term”.

The only fetter on the exercise of the court’s discretion was the requirement to focus on the state of repair of the holding. Similarly, under s.30(1)(b) of the Act, the court’s sole focus was on the tenant’s persistent delay in paying rent which had become due. Under s.30(1)(c) of the Act the court had a wider discretion. It was entitled to focus not only on “other substantial breaches”, but also, or alternatively, on “any other reason connected with the tenant’s use or management of the holding.”

Importantly, the Court of Appeal held that there was no requirement for a landlord to prove that a financial prejudice had been suffered to demonstrate that the grant of a new tenancy would be unfair or contrary to his interests.

Elizabeth Dwomoh / 1st Aug 2014


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