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Milestar Ltd v Gandesha

In Milestar Ltd v Gandesha, the landlord successfully opposed the grant of a new lease of retail premises in Hackney on Grounds (b) (rent arrears) and (f) (redevelopment).

The tenant argued that Ground (b) was not made out because it had various cross-claims against the landlord – most notably a claim for an account of rent received by the landlord in respect of an adjoining property of which the tenant was the beneficial owner – for amounts that exceeded the arrears of rent that were outstanding to the landlord. The tenant submitted that because it had a right of set off in respect of the arrears upon which the landlord sought to rely the rent had not “become due” for the purposes of section 30(1)(b) of the 1954 Act. The tenant relied on the decision in Secretary of State for Defence v Spencer [2019] EWHC 1526 (Ch), a case under the Agricultural Holdings Act 1986, as support for that proposition.

The tenant said that Ground (f) was not made out because there was no real prospect of the landlord obtaining planning permission for the redevelopment and that the objective element of Ground (f) intention was not therefore satisfied.

HHJ Monty QC decided that both grounds were made out.  The Judge said that the tenant’s cross-claims lacked the required degree of connection with the landlord’s claim for rent under the lease and that they could not therefore be set up as a defence of equitable set off. The Judge also concluded that, even if there had been a right of equitable set off, the rent would still be “due” under the lease: the fact that a claim for judgment for the arrears might fail because the set off defence would be available to the tenant was beside the point. The Judge considered that he was not bound by the decision in Secretary of State for Defence v Spencer, which concerned a different statute, and that the reasoning in that case did not affect his conclusions about the interpretation of section 30(1)(b) of the 1954 Act.

The Judge preferred the evidence of the landlord’s planning expert and determined that Ground (f) was also made out. The tenant was the author of its own misfortune in this context, having made the mistake of instructing a planning consultant, who had previously been instructed by the tenant to oppose the landlord’s planning application on its behalf, to act as its expert in the subsequent lease renewal proceedings. The Judge said that there was a “clear conflict” between those two roles and that he did not therefore place much weight on the evidence of the tenant’s planning expert. The decision is a salutary warning to all that the temptation for a party to use a member of its existing professional team as its expert in lease renewal proceedings is one that should generally be resisted.

Nat Duckworth acted for the landlord at the trial. The full judgment is here.


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