Latest Legal News - Landlord's Misrepresentation - Case Update (January 2010)

The Court of Appeal has decided that a landlord must pay a tenant additional compensation for having misrepresented its intentions to redevelop the premises upon the expiry of the tenant's lease.

In the case of Inclusive Technology v Williamson, the tenant held a lease of business premises. The landlord served a notice to terminate the tenancy objecting to renewal on the ground that the landlord wished to redevelop the premises. Whilst the landlord did intend to do this as at the time the notice was served, it subsequently changed its mind and decided to delay the redevelopment until some unknown date in the future. It failed, however, to inform the tenant of this change of mind.

The tenant, believing that the landlord did intend to redevelop the premises at the end of its tenancy, took a lease of a new building at a higher rent. When it found out that the landlord did not intend to redevelop upon the expiry of the tenancy, it pursued the landlord for damages for misrepresentation under the Landlord and Tenant Act 1954.

The Court of Appeal found for the tenant on the grounds that the landlord, whilst making a representation to the tenant which was true as at the time it was made, then should have corrected it when it subsequently became incorrect. The landlord had a duty to act responsibly and in good faith. The compensation awarded was based on the difference between the rent that the tenant was paying for its new premises and the rent it had been prepared to pay for a renewal lease of its old premises.

The case is a reminder to landlords that in circumstances where notice has been served to terminate a lease on the grounds of redevelopment but, perhaps due to the current economic climate, there are changes of plan with regard to the timing and intention to start redevelopment, there is a duty to keep the tenant informed.

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