Tenants' counter-notices
Shaws (EAL) Ltd v Pennycook addressed the question of whether a tenant can withdraw a counter-notice indicating it is willing to vacate a premises and replace it with one stating the opposite.

Facts
The landlord served a section 25 notice on the tenant. The tenant inadvertently served a counter-notice stating that it would accept the termination of the lease. Within two months of the section 25 notice, however, the tenant realised the mistake and served a second counter-notice stating that it would not give up possession.

Decision
The main issue was whether the tenant was allowed to change its mind.

At first instance, the Court indicated that in certain situations the tenant could change its mind. It would depend on the facts of the case and in particular whether the landlord had changed its position as a result of the first notice.

This decision was reversed in February 2004. The Court said that the decision should have followed previous case law, which found that once a notice had been served the tenant could not change its mind.

There were good policy reasons to adopt this approach. Consequently, there was no breach of the tenant's rights under the Human Rights Act 1998 not to be deprived of their possessions except in the public interest.

Points to note
The case highlights that the need for certainty may override issues of 'fairness and equity'.

The changes enacted by Parliament in June 2004 removed the need for tenants' counter-notices, a move that tenants no doubt welcome.

Business Use
In Hawkesbrook Leisure v The Reece-Jones Partnership, the question was whether particular business usage of a leased premises put the lease outside the remit of the Landlord and Tenant Act 1954.

Facts
Hawkesbrook Leisure was a non-profit-making company that leased sports grounds. Membership was open to the public, who could hire facilities and buy food and drink. The Court had to decide if the lease fell within the 1954 Act.

Decision
The High Court decided in favour of the tenant, Hawkesbrook. The definition of business under the 1954 Act was wide enough to cover non-profit-making organisations.

But although the definition of a business activity carried on by an organisation is wide, not all activities fall within the Act. An example is in SoS for Transport v Jenkins, where the Court of Appeal considered that the use of land for a free community farm fell outside the Act.

Points to note
In doubtful cases, landlords would be wise to ensure the lease is contracted out.

Non-profit-making tenants should not assume that their lease will be protected.

Redevelopment breaks
In Davy's of London (Wine Merchants) Ltd v The City of London Corporation and Saxon Land BV, the Court had to balance the interests of the tenant with the legitimate development plans of the landlord.

Facts
Davy's ran a wine bar owned by The City of London Corporation. The Corporation had negotiated to sell the premises to a developer. The developer, Coronation Land, had plans to redevelop the building, together with other surrounding properties. The Corporation sought to include a break clause in the lease by which it could be terminated to allow for the redevelopment. In the County Court, the judge decided that the scheme was likely to proceed and ordered a 14-year lease, with a rolling break clause after five years. However, the sale fell through and the property was sold to another developer, Saxon Land. On appeal, Saxon Land introduced fresh evidence on the redevelopment. It sought a break clause of six months' notice, on the basis that it needed to be able to develop the property at any time.

Decision
The High Court said that to ignore subsequent events was nonsensical and artificial. The period before the break clause took effect was reduced from five to three-and-a-half years. It stated that a tenant could not run a serious business without being able to plan ahead. It was reasonable for the landlord 'to wait a year or two before regaining possession'.

Points to note
The fact that a landlord does not oppose a new lease on the basis of redevelopment or intention to occupy does not preclude it from seeking either a shorter lease or a lease containing a landlord's break clause.

In deciding whether to include a break clause in the lease, the Court need only be satisfied that there is a real possibility, rather than a probability, that the redevelop-ment will take place. The purpose of the 1954 Act is not to prevent redevelopment of suitable premises.

The Court must strike a balance between the interests of the landlord to redevelop and those of the tenant, who should be afforded reasonable security of tenure.

Case references
Shaws (EAL) Ltd v Pennycook [2004] EWCA Civ 100

Hawkesbrook Leisure v The Reece-Jones Partnership [2004] EWHC 3333 (Ch)

SoS for Transport v Jenkins (2000) 79 P&CR 118

Davy's of London (Wine Merchants) Ltd v The City of London Corporation and Saxon Land BV [2004] EWHC 2224 (Ch) © In-House Lawyer