Where a landlord and tenant cannot agree terms for the renewal of their business lease, they have to apply to the court who will determine any terms in dispute. More often than not, the most contentious term is the rent to be payable under the new lease.
In most cases the application to court is a purely protective measure (particularly where there is no dispute that a new lease is to be granted) and terms are agreed well before a judge gets involved.
However, the court process can be very slow and where the parties are unable to agree terms it can sometimes be well over a year between the issue of the application and a trial.
As a consequence, the Court Service has launched a pilot scheme effective from 1 December 2017 where all unopposed lease renewals issued in the County Court at Central London are to be transferred to the First-tier Tribunal (Property Chamber) (“FTT”).
Both clients and practitioners alike will be familiar with the FTT which primarily deals with disputes in respect of residential property. In stark contrast to the County Court system the FTT issues claims quickly and progresses them to a conclusion speedily and without delay.
The pilot scheme aims to ensure that all unopposed lease renewals progress to a final hearing within 20 weeks which is incredibly quick and far swifter than the court system. There are to be no procedural hearings and the FTT will not allow the parties to engage in several rounds of amendments to the proposed lease. In addition, unlike the court system, the FTT will not allow the parties to engage in disclosure exercises or exchange witness evidence. This is perfectly fine for a straightforward lease renewal but where issues arise regarding a landlord’s requirement for a break clause for example, this could prove problematic, as the tenant will not be able to test the landlord’s evidence.
Whilst the concern is that like the County Court system, the FTT will become quickly overburdened and unable to function anywhere near as well, the pilot scheme is a sensible way forward to reduce the already heavy burden on the County Court system and is a more appropriate forum for the resolution of unopposed lease renewals by property experts rather than judges.
Steven Ross is Partner at JPC Law.
For more information on property litigation, please contact him:
T: 020 7644 7261
T: 020 7625 4424