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Lease compesation over 14years

Lease compesation over 14years

Postby convoy2 » Thu Dec 08, 2016 1:36 pm

Hi
A lease is was granted on a commercial site in 1997 for a 20 year period.
The tenant used the site until 2006 when the site was "mothballed" except for required maintenance but no trading.The original Tenant had been taken over by larger groups 3 times.

The last Rateble value was £100k 2006-2007. Nothing since and the valuation office confirmed this.

My question is normally over the 14 year period the tenant would be entitled to twice the RV but as he traded for only 9years but was still in occupancy for over 14 years where do I stand?

I assume 5 (c) of the 54 act would have to be determined? Is there Case Law on this?


37 Compensation where order for new tenancy precluded on certain grounds.

(1)Where on the making of an application under section 24 of this Act the court is precluded (whether by subsection (1) or subsection (2) of section 31 of this Act) from making an order for the grant of a new tenancy by reason of any of the grounds specified in paragraphs (e), (f) and (g) of subsection (1) of section 30 of this Act and not of any grounds specified in any other paragraph of that subsection, or where no other ground is specified in the landlord’s notice under section 25 of this Act or, as the case may be, under section 26(6) thereof, than those specified in the said paragraphs (e), (f) and (g) and either no application under the said section 24 is made or such an application is withdrawn, then, subject to the provisions of this Act, the tenant shall be entitled on quitting the holding to recover from the landlord by way of compensation an amount determined in accordance with the following provisions of this section.

(2) Subject to subsections (5A) to (5E) of this section the said amount shall be as follows, that is to say,—

(a)where the conditions specified in the next following subsection are satisfied it shall be the product of the appropriate multiplier and twice the rateable value of the holding,

(b)in any other case it shall be the product of the appropriate multiplier and the rateable value of the holding.

(3)The said conditions are—

(a)that, during the whole of the fourteen years immediately preceding the termination of the current tenancy, premises being or comprised in the holding have been occupied for the purposes of a business carried on by the occupier or for those and other purposes;

(b)that, if during those fourteen years there was a change in the occupier of the premises, the person who was the occupier immediately after the change was the successor to the business carried on by the person who was the occupier immediately before the change.

(4)Where the court is precluded from making an order for the grant of a new tenancy under this Part of this Act in the circumstances mentioned in subsection (1) of this section, the court shall on the application of the tenant certify that fact.

(5)For the purposes of subsection (2) of this section the rateable value of the holding shall be determined as follows:—

(a)where in the valuation list in force at the date on which the landlord’s notice under section 25 or, as the case may be, subsection (6) of section 26 of this Act is given a value is then shown as the annual value (as hereinafter defined) of the holding, the rateable value of the holding shall be taken to be that value;

(b)where no such value is so shown with respect to the holding but such a value or such values is or are so shown with respect to premises comprised in or comprising the holding or part of it, the rateable value of the holding shall be taken to be such value as is found by a proper apportionment or aggregation of the value or values so shown;

(c)where the rateable value of the holding cannot be ascertained in accordance with the foregoing paragraphs of this subsection, it shall be taken to be the value which, apart from any exemption from assessment to rates, would on a proper assessment be the value to be entered in the said valuation list as the annual value of the holding;

and any dispute arising, whether in proceedings before the court or otherwise, as to the determination for those purposes of the rateable value of the holding shall be referred to the Commissioners of Inland Revenue for decision by a valuation officer.

An appeal shall lie to the Lands Tribunal from any decision of a valuation officer under this subsection, but subject thereto any such decision shall be final.
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Re: Lease compesation over 14years

Postby dls » Thu Dec 08, 2016 2:10 pm

This is very clearly a matter on which you should seek valuation advice from an appropriate professional surveyor. The sums involved, the specificity you give, and the particular circumstances all suggest that this is something answerable by an expert, and out guesses (subject to correction) are unlikely to assist.

Case law on assessment of quantum can be difficult to come by save in specialist works.
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Re: Lease compensation over 14years

Postby atticus » Thu Dec 08, 2016 2:19 pm

I agree with dls. There are big sums at stake. Some economies are false ones.
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Re: Lease compesation over 14years

Postby convoy2 » Fri Dec 09, 2016 10:35 am

Thanks

But should I not confirm the legal basis first to see whether there is any need for a professional surveyor to quantify?

I did find this

Bacchiocchi v Academic Agency Limited; CA 20 Feb 1998

 July 6, 2015  dls  0  Landlord and Tenant,


References: Times 03-Mar-1998, Gazette 25-Mar-1998, [1998] EWCA Civ 308, [1998] 2 All ER 241, [1998] 1 WLR 1313
Links: Bailii
Coram: Simon Brown LJ, Ward LJ, Moore-Bick J
The ‘continuous occupation’ required of a tenant to support a claim for disturbance on the non-renewal of his lease under the Act is not to be lost for the normal incidents of business life. The tenant had anticipated the non-renewal of the tenancy and had closed his restaurant business in the last few weeks before the tenancy ended.
Held: It was unnecessary, in establishing rights under the 1954 Act, that there should be any physical presence in the premises, provided the premises were being used in connection with a business activity.
Simon Brown LJ said: ‘whenever business premises are empty for only a short period, whether mid-term or before or after trading at either end of the lease, I would be disinclined to find that the business occupancy has ceased (or not started) for that period provided always that during it there exists no rival for the role of business occupant and that the premises are not being used for some other, non-business purpose. That to my mind is how Part II of the 1954 Act should operate in logic and in justice. It has nothing to do with the de minimis principle. Rather it is a recognition that the tenant’s business interests will not invariably require permanent physical possession throughout the whole term of the lease and he ought not to have to resort to devices like storage of goods or token visits to satisfy the statutory requirements of continuing occupation. If, of course, premises are left vacant for a matter of months, the court would be readier to conclude that the thread of continuity has been broken.’
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Re: Lease compesation over 14years

Postby atticus » Fri Dec 09, 2016 11:30 am

Exactly. Take legal advice. As we have suggested.
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Re: Lease compesation over 14years

Postby theycantdothat » Fri Dec 09, 2016 8:22 pm

The answer would seem to be in the last line of the passage quoted form the judgment: "If, of course, premises are left vacant for a matter of months, the court would be readier to conclude that the thread of continuity has been broken."

Quite apart from any question of continuity, the tenant must be in occupation for the purpose of his business when the fixed term expires to be entitled to apply to the court for a new lease. Further, even if the tenant is in occupation, compensation is only payable if the landlord succceeds in arguing one of specified in section 37. What does the landlord want to do?
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Re: Lease compesation over 14years

Postby dls » Sat Dec 10, 2016 7:11 am

Nice find. Nice summary(!)
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Re: Lease compesation over 14years

Postby convoy2 » Mon Dec 19, 2016 5:13 pm

Hi trawled through loads of case law but none close to my scenario yet.

My difficulty is that 37(5) contains provisions for ascertaining the Rateable Value of the site at the time of landlords s25 notice but there has been no such value for 10 years so how is compensation worked out? if any?
There was simply Rateable value for the first 9 years of the lease until closure.

Again is it a double edge sword as in the right hands the site has value, so if a new lease was sought by the tenant relying on little value (they may wish to do this for any future upturn) how would then a rent review be based on in my favour?

Thanks
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Re: Lease compensation over 14years

Postby atticus » Mon Dec 19, 2016 5:35 pm

Rateable value and market value for rent purposes are wholly different things.

Have you consulted a commercial property surveyor?
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