Speak the truth or say nothing!

A recent Court case illustrates the importance for landlords in not misleading their tenants where they intend to redevelop commercial premises. Secure business tenants have a legal right to renew their lease at the end of the tenancy. A landlord may oppose the grant of a new tenancy if they want to redevelop the site.

In the case of Inclusive Technology v. Williamson a notice to quit was served on the tenant requiring possession of the property because of a major refurbishment project. The tenant had previously been advised informally by the landlord of the redevelopment plans. The tenant wanted to stay put and offered to pay a higher rent to remain on site. The offer was rejected and the tenant relocated its business paying a higher rent. Shortly after the notice to quit was served the landlord changed his mind and put the refurbishment plans on hold. The tenant later discovered that the commercial premises had been relet to a new tenant.

The Landlord and Tenant Act 1954 allows a tenant to claim compensation where the tenant has vacated the premises because of a misrepresentation or concealment of material facts by the landlord. The Court of Appeal decided that the tenant was entitled to compensation as a result of the misrepresentation by the landlord and said that a landlord must act in good faith and inform the tenant if its plans changed. Compensation of £48,000 was awarded by reference to the additional rent paid by the tenant for the new premises.

The Court accepted that a landlord is not obliged to say anything at all but if it chooses to advise the tenant of any redevelopment plans then the landlord should notify the tenant of any change of plan.

Published: 19 November 2009         Author: Nick Dell, Head of Commercial Property