Roger Pearson on a publican's successful challenge against an unpopular lease
Publicans from all over the country may head for the courts to challenge controversial business leases, which they claim have been imposed on them against their will, after an Appeal Court victory for a Norwich publican.
Julian Maitland-Walker of Charles Russell, who spearheaded the recent successful Appeal Court challenge by James 'Tiny' Little in respect of his tenancy at The Alexandra public house in Norwich, says Little's victory could result, among other things, in substantial damages claims against Courage.
Courage had sought to impose 20-year Inntrepreneur leases on tenants, instead of sticking to the terms of their old '5+5' tenancy agreements under which, after expiry of a five year lease tenants were offered the option of a second five year term, subject to compliance with certain conditions.
Maitland-Walker says the ruling "is a very important test case for large numbers of former Courage 5+5 tenants who were treated very harshly by Courage who refused… to grant their applications for second five year terms.
"I think morally Courage's position was always indefensible. We are acting for a further 400 Inntrepreneur and Courage tenants. They will be seeking remedies which could include claims for damages."
Courage had argued they were entitled not to renew the old 5+5 lease because Little did not fulfil a renewal condition by agreeing a new business plan and business agreement with them beforehand.
The court, however, found that he could not be held to this term of the 5+5 agreement because he had not been required by Courage to comply with it.
The Appeal judges appear to have clarified the judicial view in relation to 'agreements to agree', says Maitland-Walker.
He said that although the 5+5 lease was a bilateral agreement the option renewal clause was a unilateral contract exercisable by the tenant alone. Only once all conditions had been satisfied did that aspect become bilateral.
Courage's refusal to negotiate and agree the business plan and business agreement prevented Little agreeing to comply with the conditions.
Maitland-Walker says: "I think it could be relevant to a number of people who were tenants under 5+5 leases. In many cases it may not be possible for them now to claim specific performance.
"Some have lost pubs or taken other leases. Compensation claimed in some cases could be quite substantial."