Section 30(1)(g) applications: a warning to all landlords

The McDonald’s Restaurants Limited v Shirayama Shokusan Company Limited [2024] EWHC 1133 (Ch) case explores section 30(1)(g) of the Landlord and Tenant Act 1954 (the “LTA 1954”). A dispute arose when the tenant, McDonald’s, sought to renew its lease with Shirayama Shokusan (the “Landlord”) and the Landlord opposed the renewal on the basis that the Landlord intended to occupy the premises for its own business purposes.

Opposing the lease renewal

The Landlord stated at the County Court trial in 2018 that it intended to run a Japanese restaurant named Zen Bento from the property. The Landlord provided detailed evidence including the specific Japanese chef who would head the restaurant and key personnel that would be involved with the management. Additionally, the Landlord had engaged an architect to design the restaurant and was able to demonstrate that it had the necessary funding. The Landlord gave an undertaking to the Court in relation to its intentions for the property. The Court was satisfied that the Landlord had a settled desire to do what it had proposed and that it had a reasonable prospect of opening the restaurant. The Court therefore refused McDonald’s a renewal lease.

The misrepresentation

Sometime after the trial, legal counsel acting for McDonald’s walked past the premises and noted that they were empty. Thereafter followed a series of pre-litigation correspondence and disclosure requests. McDonald’s then issued proceedings on the basis that the Landlord had misrepresented its position at the 2018 trial and, consequently, that McDonald’s had suffered a loss.

McDonald’s relied on two courses of action:

1. the tort of deceit; and
2. section 37A of the LTA 1954, which provides for compensation to be paid to tenants who are refused a renewal lease due to misrepresentation or concealment of material facts by the Landlord.

Whilst McDonald’s were unsuccessful in claiming for the tort of deceit, they were successful with their section 37A claim. The Landlord had argued that it had genuinely changed its mind as to what it wanted to do with the premises and that a delay in opening was largely down to COVID restrictions. However, post-trial disclosure was reviewed, and the Landlord’s integrity was called into question when emails surfaced suggesting that the Landlord had been considering different restaurant options for the premises by the time of the original trial.

Importantly, the High Court accepted that although the Landlord did have an intention to run a restaurant from their premises, it did not have a settled intention to open ‘Zen Bento’. Therefore, the Court found for the tenant. A separate hearing will determine the amount of damages to be paid to McDonald’s.

Advice to landlords

This case clarifies the Court’s position on misrepresentation when considering section 30(1)(g) applications. It is important to remember that it remains lawful for a landlord to change its mind after a section 25 application under section 30(1)(g). However, landlords must be careful to provide a true and honest picture of their plans at the time of the proceedings, to avoid being sued for misrepresentation.

Landlords need to carefully consider how specific they make their section 30(1)(g) applications. Be too specific in the application and undertaking to the court and you risk falling foul of section 37A should the evidence point to a more general intention. Be too general and you risk failing to convince the court that you have the requisite intention to satisfy section 30(1)(g).

This article was co-authored by Lauren-Anne Hicks.