Are you renewing a business tenancy in London? If so, you will need to bear in mind that the Central London County Court is piloting a procedure designed to streamline applications for business lease renewals and put them before a First Tier Tribunal (Property Chamber) with a valuer.
The main changes are:
- All applications for business lease renewals made to the Central London County Court will be automatically transferred to the First-tier Tribunal, over in Alfred Place (near Goodge St tube).
- The FTT judge will have the powers of a district judge and will apply the Civil Procedure Rules, including the usual costs rules (i.e. in very brief overview, loser pays but the court has a wide discretion depending on the behaviour of the parties, offers made and points won and lost at trial).
- The FTT will hear the case alongside a valuer, sitting as a legal assessor.
- When the proceedings are transferred, the FTT will offer the parties an opportunity to seek a 3 month stay. As is usual in the FTT, once this initial stay has been offered, no more stays will be offered save in exceptional circumstances (which do not include the parties being close to settlement).
- If no stay is requested or at the expiry of the 3 month stay, the FTT will issue directions, usually with a 20 week timetable to the final hearing and there will be no case management conference, or provision for disclosure or witness statements.
- The directions will provide for expert evidence and the valuers will be expected to exchange comparables at an early stage whilst the draft lease is circulated and before the schedule of unagreed terms is prepared.
- The FTT stated an intention to block list 40 cases for trial each week. This is on the basis that 95% will have settled before the trial date. This, again, is typically how the FTT works.
- The FTT may consider written submissions rather than an oral hearing if rent/interim rent is the only matter to be determined.
The pilot, which is mandatory, started on 1 January 2018 and will last for an initial period of one year.
The points to note are:
- It is an innovation, in 1954 Act cases, that the judge will be assisted by a valuer. This removes a typical complaint that complex questions of commercial rental valuation are commonly dealt with by judges more experienced in family or personal injury cases with no instinct for the ins and outs of the 1954 Act. However, it seems that London valuers are excluded due to potential conflicts!
- The standard directions seem to assume that there will be a travelling draft before proceedings are issued and that negotiations will have already taken place between the parties. Valuers will need to be ready with their comparables.
- The essence of the scheme is the same as usual in FTT proceedings: once you’re on the move, you keep going.
It remains to be seen how the scheme will work in practice. Most 1954 Act litigants simply want to protect their position, not to spend money swiftly on litigation. The new scheme means that, in London at least, settlement is likely to move ‘front and centre’ in business lease renewals as the parties scramble to avoid litigation costs. Watch this space!
Partner & Head of Property Disputes