Home Information Cases Neale v Whitney Electric Theatre (2011)

Skip to content. | Skip to navigation

Neale v Whitney Electric Theatre (2011)

Summary

A judge had not erred in exercising his discretion when determining interim rent under the Landlord and Tenant Act 1954 s.24D.

Facts

The appellant business tenant (T) appealed against the determination of an interim rent under the Landlord and Tenant Act 1954 s.24D. Between 1992 and 2006, T had paid rent of £43,000 per annum to the respondent landlord (L) for nightclub premises. In 2006, L served a notice under s.25 to determine the lease on June 25, 2007. T, however, applied for a new tenancy under s.24. L opposed the grant of a new tenancy, but T remained in the premises pending the determination of its application. The court subsequently dismissed T's application, so that there was no new tenancy, and the interim tenancy expired on June 14, 2010. Consequently, the court had to determine the interim rent due for the period June 25, 2007 until June 14, 2010. The judge fixed the interim rent under s.24D at the same figure as the passing rent, namely £43,000 per annum. T argued that the judge had (1) declined or failed to make any assessment of the rent which would have been payable in accordance with s.34(1) and (2) if a new year-by-year tenancy had been granted; (2) placed excessive emphasis on the duty in s.24D(2) to have regard to the rent payable under the existing tenancy; (3) reached an unsustainable or unreasonable conclusion on the facts, in particular in that he had paid too much attention to the fact that T had been paying £43,000 since 1992.

Held

(1) It was true that the judge had not assessed the market rent distinctly before embarking upon the exercise of ascertaining what the s.34 rent would have been on a year-by-year basis. However, he had at least addressed the requirements of the closing words of s.24D by arriving at a rough figure which he would consider to be appropriate if the tenancy was to be assessed on a year-to-year basis, and that was a figure at some 25 per cent below the passing rent. It would not be right to allow the appeal simply on the basis that, in approaching his obligations imposed by the closing words of s.24D, the judge had adopted a somewhat truncated approach (see para.14 of judgment). (2) The overriding provision in s.24D was s.24D(1), namely "the rent which it is reasonable for the tenant to pay". Section 24D(2) was enacted following the Law Commission's draft bill to prevent tenants holding over under the old rent whilst stringing out proceedings for a new tenancy, and also to provide the cushion spoken of by Nourse L.J. in Charles Follett Ltd v Cabtell Investments Ltd (1988) 55 P & CR 36 CA (Civ Div) against the advent of a new and higher rent. In that context, and in a time of inflationary rents, the provision was there for the protection of the tenant. In the instant case there was no future rent between the parties. There was no cushion or any need for one. The judge's duty was simply to arrive at a reasonable rent taking account of the passing rent and the interim market rent on a year-by-year basis. That was, broadly at least, the judge's approach, Charles Follett considered (paras 20-21). (3) Given that the judge had been exercising a broad discretion, he had been entitled to conclude that there was no good reason why T should not continue to pay a rent which would have been properly chargeable for the premises (para.32).

Appeal dismissedThe appellant business tenant (T) appealed against the determination of an interim rent under the Landlord and Tenant Act 1954 s.24D. Between 1992 and 2006, T had paid rent of £43,000 per annum to the respondent landlord (L) for nightclub premises. In 2006, L served a notice under s.25 to determine the lease on June 25, 2007. T, however, applied for a new tenancy under s.24. L opposed the grant of a new tenancy, but T remained in the premises pending the determination of its application. The court subsequently dismissed T's application, so that there was no new tenancy, and the interim tenancy expired on June 14, 2010. Consequently, the court had to determine the interim rent due for the period June 25, 2007 until June 14, 2010. The judge fixed the interim rent under s.24D at the same figure as the passing rent, namely £43,000 per annum. T argued that the judge had (1) declined or failed to make any assessment of the rent which would have been payable in accordance with s.34(1) and (2) if a new year-by-year tenancy had been granted; (2) placed excessive emphasis on the duty in s.24D(2) to have regard to the rent payable under the existing tenancy; (3) reached an unsustainable or unreasonable conclusion on the facts, in particular in that he had paid too much attention to the fact that T had been paying £43,000 since 1992.

Court of Appeal
Laws LJ, Longmore LJ, Etherton LJ
Judgment date
15 July 2011
References

​LTL 25/8/2011 : [2011] EWCA Civ 1032

Practice areas