B&M Retail Ltd v HSBC Bank Pension Trust (UK) Ltd
Judgment has just been handed down in the Central London County Court (HH Judge Saunders) in B&M Retail Ltd v HSBC Bank Pension Trust (UK) Ltd. Guy Fetherstonhaugh KC and Julia Petrenko, instructed by Andrew Myers and Kathryn Lister of Stephenson Harwood LLP, acted for HSBC in securing an immediate redevelopment break clause in a business tenancy renewal.
The main issue in the hearing, which lasted for three days, was whether the expert planning evidence led by the parties justified the inclusion in the new tenancy of a lease of premises on a retail park in Willesden of a redevelopment break clause, and if so when that break clause should be operable. The judgment reviews the authorities on the subject before accepting HSBC’s argument that the court will only upset a landlord’s redevelopment ambitions if there is a major factor which points the other way; and that the court should reject any terms which would either prevent redevelopment, or delay it unduly.
HSBC’s evidence, which the Judge accepted, was that it would have opposed any section 26 request served by B&M, and only failed to do so because of a mishap in its post room during the Covid lockdown period. Had it been otherwise, then HSBC would have opposed the grant of a new tenancy on the ground set out in paragraph (f) of section 30(1) of the Landlord and Tenant Act 1954. Its aim was therefore to re-enable its redevelopment plans by having included in the new tenancy a redevelopment break clause, operable at the first conceivable moment.
The expert evidence before the court on behalf of the tenant, B&M, was that there was no real possibility of the local planning authority granting permission for HSBC’s proposed works, on the footing that they ran contrary to a number of established policies for the area. HSBC’s planning expert, on the other hand, pointed to the practical limitations of those policies, which were largely inchoate. The judge preferred HSBC’s evidence, holding that it was a “sound and practical opinion”, and that it would be wrong for the court to prejudge the outcome of the planning application.
This decision illustrates the hurdles that a resourceful tenant is able to erect in an attempt to prevent a redevelopment of its premises, but also serves as a useful reminder of the importance of strategic planning in 1954 Act renewals, and the steps a landlord may take to overcome such hurdles.
Read the full judgment here.
Back to news listing
