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Recent case provides guide on re-occupation of leased premises

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In brief if a Landlord (L) wants to remove a Tenant (T) upon the expiry of the Lease they can do this on the basis that they themselves want to occupy the premises and use it for their own business purposes.  T can counter that on the ground that either the minimum time of 5 years for L to have held its interest already has not yet passed or that L does not have a settled intention to occupy the premises if they obtained possession. 

In this case T occupied part of an oil terminal.  Part of this involved a complex series of pipes and other equipment which run under the terminal and which was owned by T.  L wanted to end the Lease and occupy the terminal for their own business purposes.  T objected, partly on the ground that if they removed their pipes (which they were entitled to do) L could not have an intention to occupy the premises as it would take a lot of time (in the region of 2 years) and cost a lot of money (£60 million plus) to replace the pipes and equipment.  As a consequence both L and T would suffer financially in the short term. 

T’s argument was however rejected by the Court.  They decided that L had shown a settled intention to occupy the premises and to run the business.  The Court was not concerned whether it was a prudent business decision by L to do this.  The Court found that L’s intention was genuine (e.g. it had supporting board minutes and finance in place) and that it intended to occupy the terminal and trade from it. 

This case is a useful summary of the law in this area and shows what you need to do to prove “intention” to occupy before the Court.  It also shows the tactical advantages to be gained by purchasing a freehold more than 5 years before the end of the lease as this is the minimum period of time necessary before making a claim under this section.

If you require any further information regarding items discussed in this article please contact Michael Callaghan on 01245 493939 or email callaghanm@gepp.co.uk

This above is not legal advice; it is intended to provide information of general interest about current legal issues.