Security of tenure in business tenancies: Whether commercial premises were protected by security of tenure (TFS Stores Ltd v BMG (Ashford) Ltd – 2021)

In circumstances where a tenant’s declaration to exclude leases from security of tenure provisions was completed without reference to a specific term commencement date, was the exclusion still valid?

The background

In TFS Stores Ltd v BMG (Ashford) Ltd [2021], the tenant company occupied 200 retail stores in centres nationally. One of a number of sets of proceedings, this case arose following the Covid-19 pandemic and associated enforced retail closures. The tenant sought a declaration that, despite warning notices and statutory declarations having been served and executed prior to completion, six of its leases were protected by security of tenure under the Landlord and Tenant Act 1954.

Access dates had been agreed under agreements for lease for a number of stores, and these access dates were to be the term commencement dates under the relevant leases which would be entered into straight away. The 1954 Act statutory declarations referred to ‘for a term commencing on the date on which the tenancy is granted’, with one statutory declaration using ‘on a date to be agreed’. Specific dates were not stated.

The decision

The Court of Appeal found in favour of the landlord, confirming that each variation of wording used was acceptable and determining that the leases were therefore excluded from security of tenure provisions. The court considered the purpose of the statutory declaration procedure, which is to ensure that the tenant is aware of the exclusion of security of tenure, and accepts this; in fact, the tenant does not need to serve the declaration on the landlord at all, as the acknowledgement of the arrangement is purely for the tenant’s own purposes.

Specific technical dates do not need to be used; this could lead to a tenant benefiting from its own error while the landlord assumes the risk. The Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 provides for tenants’ declarations to be completed ‘in the form, or substantially in the form prescribed’, which gives parties some room to vary the wording and completion of the form in a way which considers their own arrangements.

Advice and action for landlords

This helpful decision supports both landlords and tenants, giving them the flexibility that is often required to insert wording in their 1954 Act documentation to suit the terms of their own arrangements, without the requirement to insert specific term commencement dates. This is particularly useful where it is difficult or impossible to determine a specific future date with certainty, such as where agreements for lease are entered into.

Parties may use a formula sufficient to identify the lease without invalidating the declaration, which may in some instances result in a tenant benefiting from its own error, whether deliberate or accidental.