Inclusive Technology v Williamson

Landlord and Tenant Act 1954 – Respondent landlord serving section 25 notice opposing new tenancy on ground of intention to refurbish within section 30(1)(f) – Respondent later deciding not to refurbish but not informing appellant tenant – Appellant moving to more expensive premises – Whether failure to inform appellant amounting to misrepresentation or concealment – Whether appellant entitled to compensation under section 37A – Appropriate basis for assessing compensation – Appeal allowed in partThe appellant held a lease of two units in a business park for a term of six years to January 2007. The rent increased annually and was £35,000 pa in the last year of the term. In June 2006, the respondent landlord served notice, under section 25 of the Landlord and Tenant Act 1954, determining the tenancy on the expiry of the contractual term and indicating that he would oppose the grant of a new tenancy on the ground of an intention to refurbish within section 30(1)(f). In a covering letter, he stated that it was necessary to obtain vacant possession to carry out the intended works. The appellant offered a rent of £45,000 pa if it were permitted to remain in occupation but the respondent declined. The respondent later decided to delay the refurbishment and instructed his agent to market the premises. The appellant was not informed. It proceeded to sign a lease for nearby premises at a rent of £53,000 and vacated the two units in December 2006.Under section 37A of the 1954 Act, the appellant claimed compensation for possession obtained by misrepresentation; it requested £90,000, being six times the difference between the rent at its new premises and the assumed market rent of the old units in their unrefurbished state at £38,000.Dismissing the claim, the judge held that the respondent had not been guilty of misrepresentation or concealment since he had: (i) accurately stated his intentions when serving the section 25 notice: (ii) given no representation that he would inform the appellant of any change of decision; and (iii) been guilty of no dishonesty or deliberate concealment. He considered that the appropriate compensation figure would have been £48,000, representing a loss of £8,000 pa over six years as the difference between the appellant’s new rent and the figure of £45,000, which the appellant would have agreed to pay for a new tenancy negotiated without the need for an application to the court. The appellant appealed.Held: The appeal was allowed in part. (1) The respondent’s representation in his covering letter to the section 25 notice was not merely a statement of what was in his mind at the time but was directly referable to a statutory process designed to enable him to obtain possession. He had in mind a specific transaction, a specific purpose and a specific time-frame. The letter amounted to a continuing representation, which became a misrepresentation when it later became false; alternatively, it gave rise to a duty or expectation that the respondent would inform the appellant if he changed his mind, such that his failure to do so amounted to concealment: With v O’Flanagan [1936] Ch 575 applied; Wales v Wadham [1977] 1 WLR 199 distinguished. Although the service of a section 25 notice indicating a reliance on ground (f) of section 30(1) could not itself amount to a representation of intention, in the instant case the respondent’s letter had done more than restate the contents of the notice: Betty’s Cafes Ltd v Phillips Furniture Stores Ltd (No 1) (1958) 161 EG 319 distinguished. It was relevant that the letter was a clear statement of the present intention that had given rise to the service of the notice; that the tenor of the letter, although it said nothing expressly regarding the timing of the works or their details, when read in context directed attention to what would happen at the end of the tenancy; it was not unreasonable for the appellant to rely on what it had been told. Moreover, the respondent had been put on notice that the appellant was looking for alternative premises, and that if there were a change of heart, it needed to be told quickly. In those circumstances, there had been misrepresentation or concealment within section 37A and the appellant was entitled to compensation.(2) The judge had not erred in his approach to the assessment of compensation. He had been entitled to find, in the light of the parties’ previous business dealings, that had the respondent informed the appellant of his change of mind, the parties would have sought a negotiated solution rather than going to court. The respondent knew that the appellant was willing to pay £45,000, which the appellant regarded as a realistic proposal in circumstances where the only other available premises, namely those to which the appellant had ultimately moved, were at a substantially higher rent. There was no obvious reason why the respondent should have settled for less.Richard Lander (instructed by Baxter Caulfield, of Huddersfield) appeared for the appellant; Anthony Elleray QC (instructed by Pearson Hinchliffe, of Manchester) appeared for the respondent.Sally Dobson, barrister