Frozen Value Ltd v Heron Foods Ltd

For the purposes of opposing renewal of a business tenancy on ground (g), “the landlord” means the competent landlord under the Landlord and Tenant Act 1954, not merely the immediate landlord. Successive interests may be aggregated where the landlord remained competent throughout the relevant five-year period. A landlord who ceased to be competent because its reversion became too short cannot rely on earlier time as immediate landlord. A later interest created within the five-year period therefore triggers the statutory bar.

Frozen was the tenant of a business premises under an underlease. It sought a new tenancy under Part II of the Landlord and Tenant Act 1954. Heron, which had been the immediate landlord, later obtained a new head lease and opposed renewal on ground (g), asserting an intention to occupy the premises for its own business.

The Sheffield County Court, applying a preliminary issue decision of Mr Recorder Murphy dated 10 March 2011, held that Heron genuinely intended to occupy the premises and was not barred by the five-year rule in section 30(2). Frozen appealed. The central issue was whether Heron’s earlier period as immediate landlord could be aggregated with its later interest, despite an interruption during which it was not the competent landlord.

By a majority, Jackson and Lloyd LJJ allowed the appeal. Rimer LJ dissented and would have dismissed it.

1. Statutory scheme. For Part II of the Landlord and Tenant Act 1954, section 44 makes the competent landlord the relevant landlord for section 30(2). An immediate landlord whose reversion has less than fourteen months to run is not the landlord for those purposes and has no relevant interest during that period.
2. Successive interests. The authorities establish that successive leasehold interests, and sequences involving freehold and leasehold interests, may be aggregated where the relevant person remained the competent landlord throughout the five-year period. Diploma Laundry Ltd v Surrey Timber Co. Ltd [1955] 2 QB 604 supported disregarding an inferior interest which did not qualify under section 44. Artemiou v Procopiou [1966] 1 QB 878 and VCS Car Park Management Limited v Regional Railways North East Limited [2001] Ch 121 did not decide the effect of an interruption in competent-landlord status.
3. Application. Heron ceased to be the competent landlord between 17 May 2009 and 24 February 2010 because its reversion fell within the short-reversion restriction. Its new head lease, created on 24 February 2010, was therefore a new interest created within the relevant five-year period. Heron’s earlier period as immediate landlord could not be aggregated with it. The interruption was fatal to reliance on ground (g), despite Heron’s genuine intention to occupy.
4. Precedent and disposition. Lloyd LJ held that a precedent must be confined to the material facts and issues actually arising for decision. The majority treated Artemiou as binding only on the limited successive-interests principle and distinguished the present case. Heron had pleaded no other ground of opposition. The matter was remitted to Sheffield County Court to determine the terms of Frozen’s new tenancy.

1. Court of Appeal (Civil Division) — appeal allowed by majority in [2012] EWCA Civ 473; the case was remitted to Sheffield County Court.
2. Sheffield County Court — Mr Recorder Murphy held that Heron genuinely intended to occupy the premises for its business and was not barred by section 30(2); Frozen’s claim was dismissed.