Saville-Edells v Jain (County Court/FTT 15 December 2021) 19 January 2022
Joe Ollech, instructed by John May of TWM Solicitors, appeared for the tenant in this recent 1954 Act lease renewal decision, concerned with rental levels pre and post pandemic. In essence, the relevant facts and the result are as follows:-
- The tenant has occupied a shop at 174 Kensington Church Street, London, W8 4DP since 2003. They trade as "Pet Pavilion", selling pet foods and accessories and providing pet grooming.
- The ground floor of the shop is 224 sq ft and the basement is 227 sq ft and the premises has an area of 246.7 sq ft ITZA (in terms of Zone A space) after treating the basement at A/10 ITZA.
- The most recent lease was at a rent of £22,500 per annum and ended on 23 July 2018.
- The lease renewal proceedings were commenced on 24 May 2019 and the tenant sought a rent of £32,500 per annum and the landlord counter-proposed £50,000 per annum. By the Trial, the tenant was arguing for £25,125 per annum and the landlord was seeking £45,000 per annum.
- Relying principally upon a comparable at 180 Kensington Church Street, and disregarding pre-pandemic rental evidence, the Judge determined that the new rent for a 15 year lease should be £28,350 per annum based on £112.14 psf in accordance with the letting of 180 Kensington Church Street in December 2020.
- Given the changes in the market during the course of the Proceedings, the Judge set £30,550 per annum as the interim rent to reflect the highs and lows of the market over the period since April 2019.
A short note of the case, and a link to the judgment is available here: https://www.falcon-chambers.com/news/saville-edells-saville-edells-v-jain.
Jonathan Ross of Forsters LLP, a commercial property litigation Partner, caught up with Joe with some follow up questions on the case that are likely to be of practical interest to commercial L&T litigators.
JR: Why was there an Assessor as well as the Judge, and does it actually assist having a chartered surveyor assisting the Judge re valuation?
JO: There was an assessor because this was one of the cases that was transferred to the FTT (although still at Central London County Court) under the Pilot Scheme. It was my first experience under this system. It is hard to tell how and to what extent the assessor assisted the Judge, because she is not referred to in the judgment.
To some extent it felt a little disconcerting when the Judge made it clear that the assessor was there to assist him, although the judgment would be entirely his, because the set up does not allow the parties an opportunity to see or test the advice she was giving him. In arbitrations, where I am in front of an arbitrator who has an assessor, I expect to have an opportunity to comment on questions or observations the assessor may have.
That said, those were latent concerns. This particular assessor seemed very competent, and she asked only a handful of questions at the end of my cross- examination of the landlord’s expert – which showed that she had a clear understanding of his report and its weak points. I assume that the Judge must have been assisted by having her support and experience to draw on.
JR: Am I right in thinking the Judge did allow 3 months' rent free for fitting out by adopting the lower figure of £112.14 psf – as you know, it remains a hot topic whether any fitting out rent-free period should be allowed on a lease renewal but this is not actually expressly referred to in the Judgment.
JO: Yes, I think you’re right about that. The primary comparable of 180 Kensington Church Street was adjusted by both experts to allow for its three month rent free period, and that rent became the base line for the subject premises. So it seems to me that although it was not directly stated the new rent does allow for a notional rent free period.
JR: Was the letting of 180 Kensington Church Street also for 15 years so there was no discount for a long lease? And is this case a good example of a Judge fixing on just the most relevant comparable to determine the new rent?
JO: Yes, the comparable was also 15 years and, yes, the Judge adopted the rental value from the best comparable given how close it was to the subject property and it was a post-pandemic letting.
JR: What happened to weighting 180 as it was in a better location? The Judge seems to have ignored or disregarded this point raised by Mr Marks, the tenant's valuer.
JO: To be fair to the Judge I think he may have quite fairly just ignored that – the two shops are only three doors apart on the same parade, and the real difference between the two was that 180 is a slightly wider unit and has a better layout and rear/side staircase rather than central staircase in 174 which really eats into the useful space.
JR: Why did the tenant concede upwards only reviews?
JO: I can’t answer that one. The brief came to me before trial with all the terms agreed save for one minor term and rent.
JR: Was there a rent suspension clause in the new Lease to cover any future lockdowns?
JO: No. Again, this was an aspect of the terms that were agree before I was instructed. It may be because the tenant’s business was one of those that did not actually have to shut down. Although its trade was obviously affected, people were allowed to take pets to groomers so I suppose they were able to maintain their retail offering alongside that. But that is an educated guess.
JR: Were there any other practical lessons learnt from your experience on the F-tT pilot scheme that you can share with us?
JO: Yes, there was. A separate point of interest was on the costs front. We had a separate fight about that when judgment was handed down and the Judge accepted our argument that this was a case where the landlord lost and should pay the tenant's legal costs. He was about to move to a summary assessment but none of the lawyers on either side had assumed that that would happen. It had been listed as a three-day trial (although we finished it in two), with an expert apiece, and we had all assumed it was effectively a multi-track case. In fact, on the standard directions transferring the case from the County Court to the F-tT the case is allocated by default to the fast track.
The Judge (Deputy Judge Martynski) was sympathetic to the parties for having assumed otherwise and gave directions for sequential written comments on the level of our costs which he would determine summarily. But he did make clear that it was the Tribunal’s expectation and plan that these cases would be treated as fast track (despite being longer than one day etc). Parties ought to be ready to have filed and served proper statements of costs in the usual way in advance of such a hearing.
It seems that Judge Martynski does a substantial amount of these pilot scheme cases and he indicated that he would arrange to make it clearer in the standard pilot scheme directions that in the usual course of events costs will be summarily assessed even in cases which go longer than day/involve more than one expert etc.
And, whilst he dismissed the landlord's argument that the rent could not be lower than the sum of £32,500 per annum proposed in the Claim Form, it is probably sensible to seek to amend your Statement of Case if you materially change your position as to the rental that should be payable.
J Ollech, Falcon Chambers
J Ross, Forsters LLP
17.01.2021
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