Exclusion Orders 2

United Kingdom

You may have received advice in the past that once a court order is obtained excluding the security of tenure provisions from a business tenancy under the Landlord and Tenant Act 1954, no amendments should be made to the form of tenancy that was submitted to the court. That was because it was thought possible that any amendment would invalidate the court order thereby leaving a landlord with a secure tenant.

The Court of Appeal has now provided us with some much needed guidance on this issue. In the case of Receiver for the Metropolitan Police District -v- Palacegate Properties Limited, decided on 9 February 2000, the draft lease attached to the court order provided that rent was to be paid annually in arrears. No dates were given for payment. When the lease was granted, the rent was in fact paid quarterly in advance. At the end of the term the tenant served a notice asking for a new tenancy, a procedure that would only be relevant for a secure tenancy.

When the landlord sought possession, the tenant argued that the lease had not been excluded because the document authorised by the court was entirely different from the one actually entered into. The matter reached the Court of Appeal which held that the purpose of the legislation permitting the exclusion of a lease was to enable the court to be satisfied that the prospective tenant understood that he would not have the protection of the 1954 Act. The terms of the actual lease had to be substantially similar to the agreed form of draft lease submitted when applying for the order.

The court considered that material changes, such as an alteration in the length of the lease or the area demised, might mean that the exclusion order was rendered invalid. However, the court held that the particular changes here would not affect the tenant's understanding that he was giving up protection of the 1954 Act.

For further information please contact Caroline Potter on 020 7367 2721 ([email protected]) or Clive Newnham on 020 7367 3981 ([email protected]).