Inclusive Technology v Williamson

Where a landlord gives a tenant a clear representation that it intends to carry out works so as to oppose renewal of a business tenancy, the representation may be continuing in its statutory context. If the landlord later knows that the intention has ceased to exist within the relevant timeframe, it must correct the representation. Failure to do so may amount to misrepresentation or concealment under section 37A of the Landlord and Tenant Act 1954 where the tenant quits in reliance on it.

A section 25 notice alone is only a warning that the landlord may rely on a statutory ground. It will not ordinarily constitute a representation of an existing intention.

The tenant occupied business premises under a protected tenancy. The landlord served a section 25 notice stating that it would oppose renewal under section 30(1)(f) of the Landlord and Tenant Act 1954, accompanied by a letter stating that vacant possession was necessary for intended refurbishment works.

Before the tenant left, the landlord decided to defer the works beyond a reasonable time after termination. It did not disclose that change. The tenant, believing that it had no option but to leave, took more expensive premises and then claimed compensation under section 37A.

His Honour Judge Raynor held that there had been neither misrepresentation nor concealment. The tenant appealed on liability and on the assessment of loss arising from the higher rent.

1. Appeal allowed in part. The court held that the landlord’s covering letter, read with the prior exchanges and the section 25 notice, was a clear representation that its present intention to refurbish was the reason for seeking possession. It was not merely a repetition of the notice.
2. In this context the representation was continuing. The representation concerned whether the landlord would be able to oppose renewal at the end of the tenancy, not merely its state of mind on the date of the letter. By October 2006 the landlord no longer intended to carry out the works within a reasonable time after termination. The continuing representation had therefore become false to its knowledge.
3. The landlord was free to change its plans, but had to correct a representation that had become false. Its failure to do so was misrepresentation or concealment within section 37A of the Landlord and Tenant Act 1954. The tenant was entitled to rely on the representation and was not required to seek a further update before quitting. Lord Justice Hughes agreed, adding that a section 25 notice alone is only a warning of a ground which may be relied upon and is not itself a representation of an intention to carry out works.
4. The court rejected the challenge to quantum. The judge was entitled to find that, had disclosure been made, the parties would probably have agreed a new tenancy at about £45,000 per annum. The resulting six-year rent loss of £48,000 was to be discounted for accelerated receipt.
5. The tenant received the costs of the appeal, summarily assessed at £11,822.10. The costs of the claim below were awarded to the tenant and those of the counterclaim to the landlord, both subject to detailed assessment. The amount due, including the discount, was to be agreed or determined on written submissions.

• Court of Appeal (Civil Division): Allowed the tenant’s appeal on liability under section 37A, but dismissed the challenge to the assessment of the rent-loss element of compensation: [2009] EWCA Civ 718.
• High Court, Chancery Division, Manchester District Registry: His Honour Judge Raynor held that the landlord had made neither a misrepresentation nor a concealment of material fact, and therefore dismissed the compensation claim.