Experts stumble and fall in lease renewal proceedings

A recent High Court decision has highlighted the dangers of relying upon inadequate expert evidence in lease renewal proceedings. 

The case of Flanders Community Centre Ltd v Newham London Borough Council concerned an unopposed lease renewal of a community centre owned by the Council.  The tenant first took a lease of the Centre in 2001. The premises were in a poor state of repair and the tenant agreed to carry out repair works to the tune of £14,000. In return, the rent was fixed at just £1 per annum.  The terms of the lease were unusual in that they required the tenant to monitor the activities and membership of the Centre and they also entitled the Council to take action if the use and membership were not sufficiently diverse. 

When the time came for the Lease to be renewed, the parties were unable to agree on the new rent.  The matter was referred to the Court with the Council arguing that the market rent should be £16,000 and the tenant arguing that there should be no increase on the current rent of £1 per annum. 

The Judge was extremely critical of the expert evidence on both sides and declared that it was grossly inadequate. No evidence had been given as to the terms of the comparable leases relied upon by the experts. In the absence of any reliable evidence of the current market rent, the Judge disregarded both parties’ experts and held that the rent should remain at the passing rate of £1 per annum. 

The Council appealed and the High Court upheld the Judge’s decision.  The High Court agreed that because the expert evidence had been so inadequate, the Judge was entitled to rely upon the only concrete evidence before her which was the evidence of the current rent.

The case underlines the importance of presenting thorough and reliable expert evidence to the Court.  The case also serves as a timely warning that expert evidence that is in any way inadequate may be disregarded completely leaving a party exposed to the risk of a brutal judgement.

For any advice in relation to issues raised in this article, please contact Andrew Turner on 01242 586 841 or aet@hughes-paddison.co.uk.