The recent and unusual case before the High Court in Flanders Community Centre Ltd v Newham London Borough Council, an unopposed lease renewal under the Landlord and Tenant Act 1954 in which the Court determined that the passing rent was only £1, has underlined the importance of robust expert evidence.
In 2001 the local authority owned a building that was not in a good state of repair. It agreed to let the property to Flanders Community Centre. The rent reflected the poor condition of the building and was set at £1 per year; the tenant agreed to carry out and fund repair works estimated to cost in excess of £14,000; provided it carried out the works within one year rent would remain at £1 otherwise the rent would be £1,200 per year.
When the time came for renewal the parties were unable to agree on the new rent. A draft lease was circulated but not agreed and the tenant issued proceedings for a new lease. Both sides filed expert evidence. Under the 1954 Act, the new rent is the rent at which the premises could be let in the open market, applying certain assumptions and disregards. The Council argued that the market rent was £16,000. The tenant maintained that there should be no increase on the current rent of £1.
The trial judge found that the expert evidence put forward by both sides was inadequate and felt unable to rely upon it; in particular, no evidence had been given as to the terms of the comparable leases relied on by the Council’s expert so that it was not known whether they contained onerous and uncommercial requirements. In the absence of reliable evidence of market rent, the judge decided that the rent was £1 per annum.
The Council appealed saying that there was no evidence that the works originally required by the 2001 lease had ever been carried out so that the rent should have been taken as £1,200. The High Court said it was much too late to raise these arguments and it upheld the earlier Court decision saying that whilst the judge could have conducted her own analysis, she was not obliged to do so in the absence of help from the parties. Since there was no reliable evidence of the market rent, the Court relied on the only concrete evidence before it which was the passing rent.
This case is an important reminder of the importance of presenting clear and thorough expert evidence to the court. The Council’s expert had assumed that the works had been done because the rent that was being paid was £1 and no one raised the issue at trial. By the time of the appeal hearing it was too late to do so. A party who fails to provide robust expert evidence may find his evidence disregarded all together and is unlikely to be given a second bite of the cherry. The consequences of getting it wrong can be expensive and in this case may have lost the landlord up to £16,000 per annum.
Johanne Spittle is a director in the Property Disputes team.
Our experienced Property Disputes team delivers practical, specialist advice on all areas of property litigation. Please contact Johanne Spittle in York; Rob Cooke Sheffield or Hayden Glynn in Leeds for further assistance.
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