EXPERT EVIDENCE IN LEASE RENEWALS WORTH EVERY POUND
Flanders Community Centre Ltd v Newham London Borough Council concerned the lease renewal of a community centre. The tenant first took a lease of the centre from the Council in 2001. At that time, the centre was in a poor state of repair and the tenant agreed to carry out and fund repair works estimated to cost in excess of £14,000. In recognition of this, the rent was agreed at just £1 per annum. The lease also contained unusual terms requiring the tenant to monitor the activities and membership of the centre and entitling the Council to take action if the use and membership were not sufficiently diverse.
When the time came for renewal, the parties were unable to agree on the new rent. 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 per annum.
The trial judge found that the expert evidence put forward by both sides was inadequate and she 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. In the absence of reliable evidence of market rent, the judge was entitled to have regard to the passing rent of £1, which both parties agreed was a relevant factor. The judge therefore decided the rent at £1 per annum, finding that this figure remained justified by the unusual lease terms.
The Council appealed and the High Court upheld the judge's decision. The judge had been permitted to conclude that the expert evidence was unreliable. Whilst she would have been entitled to conduct her own analysis, she was not obliged to do so. The only concrete evidence before her was the current rent and (in the absence of reliable expert evidence) it was a matter for the judge to determine the weight to be given to this.
The case provides a stark warning of the importance of presenting clear, thorough and reliable expert evidence to the court. A party who fails to do so may find his evidence disregarded entirely and is unlikely to be given a second bite of the cherry. As the Council discovered, the consequences of this are unlikely to be palatable.
Case: Flanders Community Centre Ltd v Newham London Borough Council (unreported)