Big Mac 1 – Bento 0
Representatives for tenants and landlords should read this article, as the recent case of McDonald’s Restaurants Ltd v Shirayama Shokusan Company Ltd [2024] EWHC 1133 (Ch) exemplifies the importance of not misrepresenting one’s intentions to the Court.
Also and whilst the above case relates to the Landlord and Tenant Act 1954, PIC believe the consequences (whilst obviously not exactly similar) could relate to any claim where there has been misrepresentation.
In the above case McDonald’s Restaurants Ltd was the former tenant of ground floor and basement premises within the Riverside Building in London SE1.
The tenant held the premises pursuant to an underlease granted on 8th December 1997 for a term of 20 years and the tenant sought a new lease of the premises
The proposed new lease was opposed by the landlord (Shirayama Shokusan Company Ltd) who made an Application to the County Court for an Order for the termination of the lease.
The above Application was heard back in 2018, when the Judge decided that the landlord had proved the existence of the required intention to occupy the premises. As such the landlord was entitled to an Order terminating the lease. The tenant did not seek to challenge the Order at that stage and the lease came to a natural end on 5th March 2019 with the tenant vacating the premises.
The landlord director had given evidence to the County Court that it was the landlord’s intention to open a Japanese restaurant called Zen Bento at the premises.
The landlord however did not open the Zen Bento restaurant by the specified date and in fact opened a completely different restaurant/bakery at the premises.
The subsequent case to the High Court therefore related to a claim for deceit and for damages under section 37A of the Landlord and Tenant Act 1954 – claiming that the Order made by the County Court was obtained through misrepresentation.
The landlord denied the tenants claims and the matter proceeded to a fully contested split Trial.
At the listed split Trial in May 2024, the tenants claim for deceit was unsuccessful, however, the High Court found that the landlord had misled the Court in relation to its intention to occupy the premises, as at the time they provided their evidence to the County Court, they did not have firm and settled intentions to open the Zen Bento restaurant. Therefore, the Order terminating the tenant’s tenancy was found to have been obtained by misrepresentation.
The landlord was therefore liable to pay compensation to their former tenant McDonald’s Restaurants Ltd – compensation is yet to be determined by the Court.
Summary
Obviously, this decision will be welcomed by tenants where there have been misrepresentations by a landlord and further outlined the importance to landlords to ensure they had concrete intentions to occupy at the date of the hearing, as it was apparent occupancy was also a requirement.
How can PIC help?
Whilst the general rule on costs in misrepresentation claims are that the losing party pays the winning party’s costs, the Court can always apply their discretion in making alternative costs Orders
Partners in Costs (PIC) are an expert team of costs lawyers and draftsmen committed to putting the profit back into legal costs. Established in 1996, Doncaster-based PIC are a claimant-only cost firm specialising in a tailor-made service agreement to suit the client.
PIC can be contacted on 01302 343666.
Nick Tomlinson, Costs Consultant
04.07.2024