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

A declaration used to exclude security of tenure from a business tenancy is in, or substantially in, the prescribed form if, read as a whole, it fulfils the form’s essential purposes. Those purposes are to identify the proposed lease and to confirm that the tenant received and understood the warning that it was giving up statutory security of tenure.

The commencement entry is directed to identifying the lease. It may state either the date from which the term is calculated or the date on which the leasehold interest commences. It may also use an ascertainable formula, or words such as a date to be agreed, if the declaration as a whole sufficiently identifies the lease. The statutory scheme does not impose a rigid technical requirement that would make valid commercial contracting-out arrangements ineffective.

TFS Stores Ltd was tenant under, or assignee of, six retail leases at designer outlet centres. The parties had agreed to exclude the security of tenure provisions in Part II of the Landlord and Tenant Act 1954.

The landlords had served valid warning notices. The dispute concerned statutory declarations made by the tenant. The declarations used differing wording for the blank following “for a term commencing on”, including references to an access date, a date to be agreed, and the date on which the tenancy was granted.

HHJ Davis-White QC, sitting as a High Court judge, held that the declarations were in, or substantially in, the prescribed form: [2020] EWCA Civ 833. The tenant appealed, contending that the wording failed to state the date on which the leasehold interest itself commenced and therefore invalidated the contracting-out agreements.

Decision

1. The Court of Appeal dismissed the appeal. The declarations were in, or substantially in, the prescribed form. The parties had therefore validly excluded security of tenure under Part II of the Landlord and Tenant Act 1954.

2. The correct approach was purposive. Following the approach in [2008] EWCA Civ 178, the question was whether the declaration, viewed in its statutory and commercial context, performed the essential functions of the prescribed form. A departure invalidates the declaration only if it thwarts or significantly blunts an essential purpose.

3. The essential substance lay in paragraphs 2 to 4 of the declaration: the tenant acknowledged the proposed exclusion, receipt of a proper warning notice, and its reading and acceptance of the consequences. Paragraph 1 served to identify the lease by reference to the tenant, premises and commencement of the term.

4. The commencement wording did not perform the further functions advanced by the tenant. It was capable of referring either to the date from which the term was calculated or to the date when the leasehold interest commenced. Either date could therefore be used. A formula, including an access date or a date to be agreed, was permissible where the declaration as a whole left no doubt about the lease concerned.

5. A contrary construction would introduce technicality and uncertainty inconsistent with the legislative aim of a simpler contracting-out procedure that still ensures an informed tenant. On the facts, every declaration clearly related to the relevant lease and recorded the tenant’s informed acceptance of a tenancy without security of tenure.

Arnold LJ and King LJ agreed with Males LJ. Arnold LJ additionally doubted, without deciding the point, whether the information in the declaration had to identify the lease unambiguously without assistance from extrinsic evidence.

• Court of Appeal (Civil Division) dismissed the tenant’s appeal and upheld the validity of the contracting-out declarations: [2021] EWCA Civ 688.
• High Court of Justice, Business and Property Courts, Property, Trusts and Probate List (Ch) HHJ Davis-White QC held that the declarations were in, or substantially in, the prescribed form and did not invalidate the exclusion of Part II of the Landlord and Tenant Act 1954: [2020] EWCA Civ 833.