Security of Tenure in Business Tenancies: Whether commercial leases were within security of tenure provisions (TFS Stores Ltd v Designer Retail Outlet Centres (Mansfield) General Partner Ltd and other companies – 2021)

Although warning notices and statutory declarations had been completed in each case, the tenant in this matter applied for an order that their retail premises were protected by the security of tenure provisions under the Landlord and Tenant Act 1954.

The background

In TFS Stores Ltd v Designer Retail Outlet Centres (Mansfield) General Partner Ltd and other companies [2021], the tenant company occupied premises in centres nationwide for the retail of fragrances. It brought proceedings in this case to seek a declaration that 6 leases across a number of outlet centres enjoyed security of tenure. In all cases, the landlord and tenant had served the appropriate warning notices and statutory declarations had been executed to exclude leases from security of tenure.

The tenant presented a number of arguments, including lack of authority by signatories to execute the statutory declarations or to receive warning notices, and argued that wording in the statutory declaration was defective. The High Court found in favour of the landlord, and the tenant appealed.

The decision

The Court of Appeal upheld the decision of the High Court, dismissing the tenant’s appeal and finding that the leases were validly excluded from security of tenure provisions.

The statutory declaration should be ‘in the form or substantially in the form’ prescribed by the Landlord and Tenant Act 1954, but wording should not be interpreted so literally that it fails to make commercial sense and that the purpose of the declaration is clear.

The declaration identifies the lease. If the wording of the executed document serves this purpose, stating the name of the tenant, defining the premises and stating the lease term commencement date, then the declaration satisfies its purpose. Wording ‘for a term commencing on…’ can mean either the date from which the term is calculated or the date when the interest commences, but both interpretations are valid.

In these cases, there was no doubt as to the leases the statutory declarations referred to, and the leases had been validly contracted out of the security of tenure provisions.

Advice and action for landlords

This is a commercially important decision for landlords and tenants, confirming that the standard contracting out process adopted across the industry is valid and in accordance with the intentions of Parliament when implementing the statutory procedure.

To decide in favour of the tenant in this case would potentially have resulted in many leases falling within security of tenure provisions, against the parties’ intentions at the time and against Parliament’s intended outcomes from the statutory procedure. The decision is very much a ‘victory for common sense’.