Summary

Where landlords had served on their tenants a valid notice under a break clause in the lease of commercial premises and a valid notice under the Landlord and Tenant Act 1954 s.25, and had established a valid ground of opposition to a new tenancy under s.30(1)(f) by demonstrating their settled intention to redevelop the premises, they were entitled to an order under s.29(2) terminating the current business tenancy.

Facts

The claimant tenants (C) claimed various heads of relief against the defendant landlords (J) arising out of the purported operation of a break clause in the lease of commercial premises, and J sought an order terminating C's tenancy. The various parties had previously been involved in the ownership of commercial premises and an arcade business carried on in its ground floor. Following demerger, J acquired the freehold, and C the business and tenancy of the ground floor. J later expressed a wish to redevelop the property. They served a notice to operate a break clause in the lease and notice on C under the Landlord and Tenant Act 1954 s.25. J opposed the grant of a new tenancy on the ground of opposition in s.30(1)(f) and sought to terminate the tenancy pursuant to s.29. C claimed, inter alia (i) a declaration that J were estopped from seeking to determine the tenancy; (ii) an injunction to restrain J from taking any further steps to determine the tenancy and requiring them to discontinue their s.29 claim. J contended that a valid break notice and valid s.25 notice had been served on C and that since they had the necessary intention to carry out the development, for which planning permission had been granted and agreements for future leases made, the court had to terminate C's tenancy. C submitted that J had not proved the necessary intention under s.30(1)(f) as they were unlikely to be able to meet the costs of the proposed redevelopment so their intention to carry it out was likely to change. In support of their claims, C argued that they had been encouraged by J to believe that they would be able to continue the arcade business at the premises for at least the remainder of the term, and that they would not otherwise have paid a substantial sum for that business. They contended that they had thereby suffered a detriment and J were estopped from terminating their tenancy.

Held

(1) The principal issue where promissory estoppel was alleged was whether one party's promise or assurance had a sufficiently material influence on the other party's conduct to make it inequitable for the first party to depart from it. Estoppel by convention might arise where both parties to a transaction acted on an assumed state of facts or law, the assumption being either shared by both, or made by one and acquiesced in by the other. In the instant case, the way in which the parties had negotiated the value of the overall business during the demerger, including the arcade business carried on at the building, had not involved a representation or assurance by J that C would enjoy any specific period of tenure, either expressly or by implication. Whilst C had mistakenly overlooked the break clause in the lease and believed that the lease had a number of years to run, J had not known of that mistaken belief and it was not justified. Those findings prevented C from succeeding in either promissory estoppel or estoppel by convention. J were not, therefore, prevented from serving and relying on the notices under the break clause and s.25, and C were not entitled to any of the relief claimed in their action (see paras 332-333, 341-344, 357, 428 of judgment). (2) On the evidence, J's otherwise settled intention to redevelop the property was unlikely to change for any reason connected with the likely cost of the scheme. J had given reliable evidence that they had made up their minds to proceed, notwithstanding the difficulties identified by C which might lie ahead. They had, accordingly, established the ground of opposition in s.30(1)(f) and it followed that they were entitled to a termination order under s.29(2) of the Act (paras 411, 426, 429).