Kwik-Fit Properties Ltd v Resham Ltd
[2024] EWCC 4
B&M Retail Limited v HSBC Bank Pension Trust (UK) Limited
10 October 2023
[2023] EWHC 2495 (Ch)
High Court
A shop (B&M) was unhappy because the landlord (HSBC) wanted to redevelop and included a clause to get the property back quickly. The court said it was okay because the landlord had a real plan to redevelop and the tenant hadn't shown much effort to find a new place. The landlord gets to redevelop sooner, but the shop still got a fair amount of time to stay.
Key Facts
- •B&M Retail Limited (B&M) appealed a County Court order granting HSBC Bank Pension Trust (UK) Limited (HSBC) a new lease with an immediately exercisable redevelopment break clause.
- •The lease concerned retail premises used by B&M.
- •HSBC intended to redevelop the premises with Aldi.
- •HSBC had a conditional agreement for lease (AFL) with Aldi, subject to obtaining vacant possession and planning permission.
- •B&M's Section 26 notice for a new tenancy was initially missed by HSBC due to a postal error.
- •The key issues at trial were the lease term length and whether a redevelopment break clause should be included, and if so, when it should be exercisable.
- •The judge ordered a five-year lease with an immediately exercisable break clause.
- •B&M appealed, arguing the break clause defeated the purpose of the Landlord and Tenant Act 1954 by providing insufficient security of tenure.
Legal Principles
The Landlord and Tenant Act 1954 aims to balance tenant security of tenure with landlord's right to redevelop.
Various cases cited, including O’May v City of London, Adams v Green, Edwards v Central London Commercial Estates.
Courts have wide discretion in determining lease terms, aiming for fairness and reasonableness between landlord and tenant.
Adams v Green, Amika Motors v Colebrook Holdings Ltd, Davy’s of London v City of London Corporation.
Delaying redevelopment is different from preventing it; the court must balance the landlord's development aspirations against the tenant's business interests.
J. H. Edwards & Sons Ltd v Central London Commercial Estates, Re Davy’s of London.
Outcomes
B&M's appeal was dismissed.
The judge correctly applied the legal principles, balancing the competing interests of landlord and tenant. The judge considered the well-developed redevelopment plans of HSBC, the potential jeopardy to those plans if the break clause wasn't immediately exercisable, and the hardship to B&M. While the judge's language could have been clearer, his actions demonstrated a proper balancing exercise.
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