Lease Renewal Proceedings Grab the Headlines

Author: Chris Alexander

It is not often that commercial lease renewal proceedings become headline news, however, this weekend I was flicking through the business pages of the Times and noticed that Humber Oil Terminals Trustee Ltd v Associated British Ports had made the papers.

The case concerned the Immingham oil terminal in the Humber Estuary which is owned by Associated British Ports and was let to a joint venture vehicle owned by Total and Conoco Phillips.  As tenant, they wanted to renew their 40 year lease which was coming to an end and to try and achieve that they had issued proceedings for a new lease under the Landlord and Tenant Act 1954.

This Act provides security of tenure for business tenants and means that a landlord can only terminate a lease after the end of the fixed term on a limited number of grounds.  One of the most common grounds for terminating a commercial lease is redevelopment but this case concerned the landlords intention to occupy the oil terminal itself.  The key date for assessing these intentions is the date of the hearing of the claim, which can often be important for tactical reasons and may have been one of the reasons that this particular part of the claim was heard as a preliminary issue.

The tenant had little option but to fight this case, as it expected that if APB assumed control of the terminal then it would cost it up to £40 million in additional charges.  APB’s case was that it wanted to occupy the terminal but that its business would involve giving access over or through the premises to other third parties.  There was a question as to whether APB’s plan would constitute occupying the premises for its own purposes and if so when, and in what circumstances APB so intended (ie if it could not show the relevant intention at the hearing date then its defence to the tenants claim for a new tenancy would fail).

Mr Justice Vos in the High Court decided in favour of APB.  In order to show sufficient intention the landlord only needed to show an ability to put its plan into effect.  Even thought the landlord’s plan may involve contracting with the current tenant charging it fees for using the port facilities, it was likely that ABP would occupy the oil terminal from the termination of the lease for the purposes of providing port facilities to third party oil companies or traders.

There remain other unresolved disputes but the landlord is now one step closer to recovering possession and the tenant.