Competition Law Challenge on Landlord Fails

19 July 2011

The law seeks to prevent a dominant position in contractual negotiations from being used abusively. However, just because the negotiating positions of two parties are not equal does not mean that redress will be available to the ‘weaker’ party.

In a landlord and tenant case, the landlord of an oil terminal gave a notice under the Landlord and Tenant Act 1954 (LTA) that, at the lease renewal, it would seek possession of the premises on the ground that it wished to occupy them itself. The lease had been entered into 40 years previously and contained no rent review provisions.

In negotiations with the tenant, the landlord had proposed that the existing lease, which had a current rent of £4 million per year, could be renewed at £23 million. Under the LTA, the court is entitled to set a rent if the landlord and tenant cannot reach agreement.

The tenant claimed that the landlord’s action was abusive and that its notice of intention to occupy the premises itself was an attempt to force the tenant to accept an excessively high rent. It contended that such action was anti-competitive and thus unlawful.

The court ruled that the tenant had failed to present sufficient evidence that the proposed rent was excessive to the point of unfairness. Furthermore, the tenant had not shown, as is required in order to sustain a challenge on the basis of competition law, that the proposed rent would have an adverse effect on consumers.

The court also ruled that this was not a case in which the landlord’s action was abusive in terms of the respective bargaining power of the two parties, since the court has the right to set the rent in the event of the landlord and tenant not being able to agree this between themselves.

For more information on this subject or any other legal matter,
please contact us:

Tonbridge: 01732 770660
Sevenoaks: 01732 747900
Email: marketing@warners-solicitors.co.uk