Humber Oil Terminals Trustee Ltd (HOTT) v Associated British Ports (ABP)

Interim rent under section 24D of the Landlord and Tenant Act 1954 is the rent which it is reasonable for the tenant to pay. The open-market assumptions and statutory disregards must be applied in light of that overriding requirement.

The relevant property excludes items installed by the tenant which the tenant has a contractual right to remove. The court should assess the practical commercial benefit of continued use of the premises, rather than assume an artificial state of affairs divorced from the circumstances contemplated during the interim period. The current rent is a factor to which the court must have regard, but it is not an upper limit. A contractual exemption from charges may have substantial rental value where the exemption continues to benefit the tenant.

HOTT occupied the Immingham Oil Terminal under four leases from ABP. The leases expired or were brought within the renewal regime under Part II of the Landlord and Tenant Act 1954. ABP opposed new tenancies under section 30(1)(g), and applied for interim rent under section 24A.

The court had to determine the interim rent for the Oil Jetty, the rent for a pipeline easement under the Oil Depot Lease, and the date from which interim rent under the Oil Jetty Lease was payable. It also had to construe the Oil Jetty Lease and ABP’s first section 25 notice.

1. The interim rent for the Oil Jetty was assessed at £14,800,306 per annum. The rent for the pipeline easement in the Oil Depot Lease was assessed at £500,000 per annum.

2. Section 24D(1) of the Landlord and Tenant Act 1954 states the governing obligation: the court must determine the rent which it is reasonable for the tenant to pay. The requirements to have regard to the existing rent and to apply section 34 are subordinate elements which must be read in that light. The court may therefore give the existing rent weight beyond merely cushioning an increase caused by inflation, but it is not an upper limit.

3. The notional letting is of the landlord’s property which the tenant has no right to detach and remove. Equipment installed by HOTT, although affixed to the jetty and legally part of the real property, was excluded because HOTT had a contractual right to remove it. The reasoning in New Zealand Government Property Corporation v H.M. & S. Ltd [1982] 1 QB 1145 was persuasive and supported that construction.

4. The court rejected HOTT’s proposed bare-jetty assumption. Interim rent had to be assessed practically and fairly by reference to the actual circumstances contemplated at the start of the interim period, including continued operation of the Oil Jetty. The clause 6(a) exemption from ship and goods dues therefore had substantial commercial value and had to be reflected in the rent.

5. The court used a depreciated replacement cost valuation for the jetty structure, applying an 11 per cent decapitalisation rate, and added half of the net savings attributable to the dues exemption. A 10 per cent adjustment was made for the precarious yearly tenancy. The Tranmere jetty transaction was useful in assessing likely dues, but was not a sufficiently close comparator for fixing the rent directly.

6. The phrase “on and from” 1 January 1970 in the Oil Jetty Lease meant that the term expired on 1 January 2010. The first notice, which purported to terminate the tenancy on 31 December 2009, was invalid. It could not be corrected under the approach in Mannai Investment Co. Ltd v Eagle Star Life Assurance Co. Ltd [1997] AC 749, because the date was central to the notice and the contractual meaning was uncertain. The second notice was valid, so interim rent ran from 8 April 2010.

This was a first-instance determination of interim rent and related construction issues. The judgment records earlier decisions in the same litigation, including the New Leases Judgment and Court of Appeal decisions, but those decisions are excluded from the cited-case analysis as stages of the same dispute.