Tenant fails to introduce lockdown rent suspension clause on renewal…
In a business lease renewal under the Landlord and Tenant Act 1954, the County Court at Brentford refused to introduce a clause in a renewal lease which would reduce the rent and service charge payable by the tenant by 50% in the event that the Government imposes a lockdown.
By the time the matter reached the Court, a number of terms remained in dispute including a term requested by the tenant which would have the effect of reducing the rent and service charge payable in the event of any further national lockdowns.
The Tenant (Poundland) sought the inclusion of the clause reducing rent and service charge on the basis that it would modernise the lease, and sought to rely on the decision in WH Smith Retail Holdings Limited v Commerz Real Investmentgesellshaft mbH in arguing that it should be included.
The Landlord, Toplain, argued that there was no market precedent for this drafting, and that its inclusion would change the relationship between the parties.
The Court found in favour of the Landlord and stated that, in line with the judgement made on O'May v City of London Real Property Co Ltd, the inclusion of this clause would not be fair in the circumstances. The Court further stated that it was not the purpose of the Landlord and Tenant Act 1954 to rewrite previously negotiated risks and considered it unreasonable 'to impose on the landlord a sharing of the risk in circumstances over which the landlord would have no control whilst the tenant may have some by reference to reliefs or schemes that might be available to them'.
The Court decided this case could be differentiated from WH Smith case as, in that case, the parties had already agreed that a pandemic rent suspension clause would be included in the renewal lease and the Court was simply determining the mechanics of how the clause would work in practice.
Although only a County Court decision, the decision in the Poundland case provides tenants and landlords alike with a reminder that any party seeking to introduce a new term on renewal to the disadvantage of the other party will face an uphill struggle.
