Sun Life Assurance plc v Thales Tracs Ltd

A tenant’s request for a new business tenancy under section 26 of the Landlord and Tenant Act 1954 is judged objectively. The words “request” and “proposals” describe formal acts and do not require the tenant to intend to take up the proposed tenancy.

Evidence of the tenant’s subjective intentions or motives when serving the request is legally irrelevant. The statutory scheme contains no such requirement, and compensation under section 37 does not depend on the tenant’s intention to renew. Courts should not read additional words into the statute without necessity.

The defendants were tenants of business premises held from Sun Life. After learning that Sun Life intended to oppose renewal on redevelopment grounds, they acquired alternative premises and served requests for new tenancies under section 26 of the Landlord and Tenant Act 1954.

The defendants did not intend to occupy renewed premises when the requests were served. The trial judge held that their proposals were not genuine and that the requests were invalid, which deprived them of compensation under section 37. The appeal concerned whether a genuine intention to take up a new tenancy was required when a section 26 request was made.

1. Appeal allowed. The requests were valid, and the defendants’ lack of intention to take up renewed tenancies did not invalidate them.
2. Section 26 required the court to examine the request and proposals objectively. A request is an act of asking for something, and a proposal is something put forward for consideration. Neither expression ordinarily communicates the maker’s state of mind.
3. The approach was consistent with Sidney Bolsom Investment Trust Ltd v E Karmios & Co (London) Ltd [1956] 1 QB 529. That decision treated validity as a matter of the document’s form and interpretation, excluding evidence of the tenant’s subjective mistake or intention.
4. The reasoning in Lloyds Bank Ltd v National Westminster Bank Ltd [1981] 1 EGLR 83 provided further support. Section 37 expressed an entitlement to compensation without qualification by the tenant’s motives for failing to pursue or withdrawing an application.
5. Betty’s Cafes Ltd v Philips Furnishing Store Ltd [1950] AC 20 did not assist. Its reasoning concerned a statutory provision which expressly required the landlord to have an intention to redevelop.
6. Cadogan v Morris [1999] 1 EGLR 59 was only a limited analogy. It concerned a different statutory scheme in which the proposed premium had significant legal consequences. A section 26 request under the 1954 Act was merely a procedural prelude and did not commit either party to a new tenancy.
7. The wider statutory context supported the objective construction. It would be anomalous for compensation to depend on the tenant’s intention merely because the tenant, rather than the landlord, initiated the statutory process. The Act expressly referred to intention where intention was required, including in section 30(1)(f) and (g).
8. The inclusion of proposals in a section 26 request was a statutory formality. Evidence of the tenant’s state of mind when serving the request was inadmissible. The order below was reversed, with the specified costs orders preserved and permission to appeal to the House of Lords refused.

• High Court, Technology and Construction Court: Mr Recorder Black QC held that a tenant making a section 26 request had to have a genuine intention to take up a new tenancy and that the defendants’ requests were invalid.
• Court of Appeal: The appeal was allowed. The Court held that the statutory request and proposals were objective formalities and that the defendants’ subjective intentions were irrelevant.