TFS Stores Ltd v The Designer Retail Outlet Centres (Mansfield) General Partner Ltd & Ors

For an agreement excluding business-tenancy security of tenure to be valid, the statutory notice and declaration procedure must be substantially complied with. The purpose of the declaration is to identify the proposed tenancy and confirm that the tenant understands that the protection of Part II of the Landlord and Tenant Act 1954 is being excluded. A commencement date need not be stated as a fixed calendar date if the formula used adequately identifies the proposed tenancy. Authority to receive the warning notice or make the declaration may be express or implied from authority to complete the transaction, and may also arise by apparent authority. Estoppel cannot be used to defeat statutory safeguards. Holding over is not “wilful” for the purposes of the Landlord and Tenant Act 1730 where the tenant bona fide believes that it has a right to remain.

Two conjoined actions concerned six retail premises occupied by TFS Stores Limited. TFS claimed that the tenancies retained the protection of Part II of the Landlord and Tenant Act 1954 because solicitors lacked authority to accept warning notices, an employee lacked authority to execute statutory declarations, and the declarations inadequately described the commencement of the terms.

The landlords claimed declarations that the tenancies had been validly contracted out. They also sought double the yearly value under section 1 of the Landlord and Tenant Act 1730 for TFS’s holding over after expiry. The central questions were whether section 38A and the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 had been complied with and whether the holding over was wilful.

1. Contracting out. The six tenancies were validly excluded from sections 24 to 28 of the Landlord and Tenant Act 1954. The purpose of the section 38A procedure was to ensure that the warning notice and declaration identified the proposed tenancy and that the tenant accepted the consequences of abandoning security of tenure.
2. Authority. The tenant’s solicitors had actual authority, express or implied, to accept service of the warning notices as part of their authority to bring the transactions to completion. The employee who made the statutory declarations had actual authority to do what was necessary to complete the transactions in accordance with the agreed heads of terms. Apparent authority was also established. The earlier written authorities in other transactions merely confirmed existing authority and did not restrict authority in the transactions before the court.
3. Declarations. The expressions referring to the access date, the date to be agreed, or the date on which the tenancy was granted were sufficient. The relevant question was whether the proposed tenancy was adequately identified. Even if one expression used a technically incorrect commencement date, the declarations remained substantially in the prescribed form. The statutory requirements were therefore met.
4. Ratification and estoppel. These issues did not arise for decision. The judge indicated that retrospective ratification was generally possible, but would not have been established because actual assent and knowledge of the material circumstances were lacking. Estoppel by deed would also not have been available where it would undermine the protective statutory procedure.
5. Double value. Section 1 of the Landlord and Tenant Act 1730 was penal and required strict construction. “Wilfully” meant holding over with knowledge that there was no right to do so. TFS had advanced its challenge bona fide, and its holding over was not wilful. The landlords were therefore not entitled to double value. Appropriate declaratory relief was to be granted, with consequential matters left for an agreed order or further hearing.