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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> TFS Stores Ltd v The Designer Retail Outlet Centres (Mansfield) General Partner Ltd & Ors [2021] EWCA Civ 688 (14 May 2021) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2021/688.html Cite as: [2021] WLR(D) 288, [2021] EWCA Civ 688, [2021] Bus LR 1407 |
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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)
[2020] EWCA Civ 833
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE MALES
and
LORD JUSTICE ARNOLD
____________________
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Appellant |
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- and - |
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(1) THE DESIGNER RETAIL OUTLET CENTRES (MANSFIELD) GENERAL PARTNER LIMITED (2) BRITISH OVERSEAS BANK NOMINEES LIMITED (3) WGTC NOMINEES LIMITED |
Respondents |
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And between |
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(1) BMG (ASHFORD) LIMITED (2) UK OM (LP2) (GP) LIMITED (3) UK OM (LP2) LIMITED (4) THE DESIGNER RETAIL OUTLET CENTRES (YORK) GENERAL PARTNER LIMITED (5) UK OM (LP3) (GP) LIMITED (6) UK (OM) LP3) LIMITED |
Respondents |
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-and- |
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Appellant |
____________________
Wayne Clark & Joseph Ollech (instructed by Shoosmiths LLP) for the Respondents
Hearing date: 29th April 2021
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Crown Copyright ©
Lord Justice Males:
Background
Mansfield and Bridgend
Swindon
Ashford, Cheshire Oaks and York
The legislation
"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."
"(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. "
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]
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 leave the premises. - You will be unable to claim compensation for the loss of your business premises, unless the lease specifically gives you this right. - If the landlord offers you another lease, you will have no right to ask the court to fix the rent. It is therefore important to get professional advice - from a qualified surveyor, lawyer or accountant - before agreeing to give up these rights. If you receive this notice at least 14 days before committing yourself to the lease, you will need to sign a simple declaration that you have received this notice and have accepted its consequences, before signing the lease. But if you do not receive at least 14 days notice, you will need to sign a "statutory" declaration. To do so, you will need to visit an independent solicitor (or someone else empowered to administer oaths). Unless there is a special reason for committing yourself to the lease sooner, you may want to ask the landlord to let you have at least 14 days to consider whether you wish to give up your statutory rights. If you then decided to go ahead with the agreement to exclude the protection of the Landlord and Tenant Act 1954, you would only need to make a simple declaration, and so you would not need to make a separate visit to an independent solicitor. |
I (name of declarant) of .(address) declare that
1. [I/ (name of tenant)propose(s) to enter into a tenancy of premises at .(address of premises) for a term commencing on ..
2. I/The tenant propose(s) to enter into an agreement with ... (name of landlord) that the provisions of section 24 to 28 of the Landlord and Tenant Act 1954 (security of tenure) shall be excluded in relation to the tenancy.
3. The landlord has, not less than 14 days before I/the tenant enter(s) into the tenancy, or (if earlier) become(s) contractually bound to do so serve on me/the tenant 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 form of notice set out in that Schedule is reproduced below.
4. I have/The tenant has read the notice referred to in paragraph 3 above and accept(s) the consequences of entering into the agreement referred to in paragraph 2 above.
5. (as appropriate) I am duly authorised by the tenant to make this declaration.
DECLARED this day of .
The background to the current legislation
The parties' submissions
"A lease operates as a grant only from the time of its execution, and acts or omissions of the tenant before that date are not normally breaches of covenant, although committed after the date from which the term is expressed to run of the deed. But the duration of the term is to be computed from that day mentioned in the lease for that purpose. So a lease may commence at one day in point of computation, and that another in point of interest.
Where the length of the lease is of relevance for the purpose of a statute, its length will normally be reckoned from the date of its execution.
The law may be summarised as follows:
1. The term created will be a term which commences on the date when the lease is executed, and not the earlier date;
2. No act or omission prior to the date on which the lease is executed will normally constitute a breach of the obligations of the lease;
3. These principles do not prevent the parties from defining the expiration of the term by reference to a date prior to that of the execution of the lease, or from making contractual provisions which take effect by reference to such a date, as by defining the period for the operation of a break clause or an increase in rent;
4. There is nothing in these principles to prevent the lease from creating obligations in respect of any period prior to the execution of the lease;
5. Whether in fact any such obligations have been created depends on the construction of the lease; and there is nothing which requires the lease to be construed in such a way as to avoid, if possible, the creation of such obligations."
(1) the first is to ensure that the declaration is made before the lease is entered into or (in the case of an agreement for lease) before the tenant becomes contractually bound to enter into the lease;
(2) the second (in the case of a lease with no prior agreement for lease) is to encourage the tenant to consider whether it will have the 14 days' notice between receipt of the Warning Notice and committing itself to pay the rent and observe the covenants of a tenancy without statutory protection which the Warning Notice tells the tenant is an important consideration in deciding whether to sign the declaration; and
(3) finally, the form invites the tenant to reflect on whether what is being offered is a "term of years certain" within section 38A.
Discussion
"24. The modern approach to statutory construction is to have regard to the purpose of a particular provision and interpret its language, so far as possible, in a way which best gives effect to that purpose. In seeking the purpose of a statutory provision, the interpreter is not confined to a literal interpretation of the words, but must have regard to the context and scheme of the relevant Act as a whole. The essence of this approach is to give the statutory provision a purposive construction in order to determine the nature of the transaction to which it was intended to apply and then to decide whether the actual transaction (which might involve considering the overall effect of a number of elements intended to operate together) answered to the statutory description."
"11. It would, to use the judge's words, be 'bordering on the absurd' if a statutory declaration was held to be ineffective on the grounds that it differed from the prescribed form because (a) it was both expressly and in law in a more solemn form than that form; and (b) although it stated that notice was served before the lease was entered into, it did not state that it was served more than fourteen days before the lease was entered into. It would be equally unreal if, assuming the statutory declaration was effective, what was contained in clause 8.2 of the lease was ineffective, because it applied to a statutory declaration rather than a declaration and because it irrelevantly mentioned the wrong paragraph of schedule 2 to the order.
12. Of course, the statutory requirements in relation to a notice or a declaration could be so clearly and unequivocally expressed that strict compliance would be required and that any deviation, however insignificant, from those requirements would render a purported notice or declaration invalid. Sometimes, indeed, although it conflicts with common and commercial common sense, this may be the result because it is correct as a matter of law. However, this is not such a case.
13. It is clear on the facts of this case that paragraph 3, and not paragraph 4, applied. However, the requirement of paragraph 3 is not that a declaration must be 'in the form set out in paragraph 7', but that it must be 'in the form or substantially in the form set out in paragraph 7'. Accordingly, the first issue is whether the statutory declaration in paragraph 8, as used in this case, is substantially in the form of the declaration in paragraph 7. The answer to that question must, in my view, ultimately turn on whether the paragraph 8 form performs all the essential functions of the paragraph 7 form. After all, the purpose of the declaration under paragraph 7, like that of a contractual or statutory notice, is to convey information. In this case, the declarant must confirm certain facts and show that he or she has received and understands certain facts and their legal consequences. One must therefore look at the form prescribed by paragraph 7, in its statutory and commercial context, and see whether the departures, either individually or taken together, from that form, in the statutory declaration used in this case, result in any of the essential purposes of the prescribed form, being thwarted or even significantly blunted. To say that this test is one of substance rather than form may well be correct, but that should not mask the point that the style, even the layout in the prescribed form, may at least in some respects be of the essence."
"137. As Mr Featherstonhaugh [counsel then appearing for the tenant] accepted, the logical conclusions of his submissions are that (1) the procedure has become more onerous than the previous court application route in the sense that the position reflected by the Palacegate Properties case, where no commencement date etc. was specified in the draft lease approved by the Court as part of the contracting out process, would no longer be a situation in which contracting out was possible. Thus, the contracting out process, rather than being easier would in fact be less flexible and may be more difficult; (2) the aim of encouraging prospective tenants to receive early Warning Notices and to make declarations earlier rather than later would be discouraged (though it is fair to point out that any declaration could be made late but it might have to be made very late). This on the basis that the answer to point (1) was, it was submitted, that declarations could be made very late in the day when the commencement date was known; (3) there may be cases where the commencement date (or grant) could only be guessed at and would almost invariably be wrong: for example in the Bridgend case the lease had to be granted within a 15 day window of relevant works being completed. If on the other hand such formula was effective for the purposes of the 2003 Order then it becomes difficult to sustain the argument that on such facts the tenant necessarily knows the date of the grant of the Lease in such cases. Indeed, Mr Featherstonhaugh's general submission was that in cases where the date of grant of the lease could not be correctly ascertained in advance but an agreement for a lease had been entered into, then the agreement for a lease would not be specifically enforceable because it would not be possible to grant a contracted-out tenancy and the parties would have to 'start again' in terms of following the s38A procedure afresh and entering into new contractual documentation. This seems to me a recipe for confusion, uncertainty and the frustration of perfectly sensible commercial arrangements entered into between prospective landlords and tenants. It also seems to me a situation where, if this is indeed the position, commercial parties might well with justification say that the 'law is an ass'. I do not consider that this does represent the law."
Disposal
Lord Justice Arnold:
Lady Justice King: