Court refuses to determine turnover rent under Landlord and Tenant Act 1954
Gary Cowen QC instructed by John Kittle of DLA Piper appeared for the successful Defendant in W (No.3) GP (Nominee A) Limited v JD Sports Fashion plc.
This was a lease renewal of retail premises in the Derbion Centre in Derby. The existing lease contained a rent based on a percentage of the tenant’s turnover. The rent to be paid in the new lease and the interim rent were in issue. The landlord was seeking the determination of a rent based on a percentage of the tenant’s turnover both for the new rent and for interim rent. The tenant sought a determination of a fixed rent.
In determining a new rent for the property of £104,300, Her Honour Judge Fine sitting in the County Court at Nottingham held that it was inappropriate to determine a turnover rent for retail premises where it was impossible to know what the turnover of the hypothetical tenant would be. To determine a turnover rent would be inconsistent with the statutory disregards in s.34 of the LTA 1954. It would only be appropriate to determine a turnover rent in exceptional circumstances where it was common in the relevant industry to determine rent using turnover as a basis.
The Judge also held that the whole of a rent free period must be devalued on a comparable property. No distinction need be made between a fitting out period and an incentive rent free period.
As to interim rent, the Judge held that s.24C(3)(b) did not apply where the existing lease contained a turnover rent provision but the new lease would not contain such a provision.
Judgment was handed down on 22 October 2021 and can be viewed here.
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