Pilot scheme for unopposed business lease renewals issued at the county court in Central London

Many people will be aware of the frustrations experienced in dealings with the County Courts, particularly in the London regions, with unfortunate delays and wasted costs being experienced for various reasons.

Some of you will also be aware of my article in July 2017, in which I shared my experiences of both the County Courts and the First-tier Tribunal (FtT), with my conclusion that perhaps the FtT is the way to go, where streamlined directions are given and case officers are available. Whilst I cannot claim to have any influence or input over this decision, it seems that the powers that be may have had similar thoughts.

As of early 2018, a pilot scheme was introduced whereby claims issued in the County Court at Central London for unopposed business lease renewals (namely those in which the landlord does not oppose the granting of a new lease, but in which the terms of the new lease have not been agreed) will be transferred to the FtT for determination.

The guidance given for this scheme provides that the FtT will have full cost shifting powers, with the FtT Judge sitting as a County Court Judge at the final hearing. Indeed my only hesitation with the FtT in July 2017 was the rule preventing a successful litigant from recovering their costs, which the pilot scheme addresses.

When considering the draft directions/timetable provided with the pilot, it can be seen that the timetable in these business lease renewals will for the main part follow that of residential lease extension cases. As with residential lease extensions, the parties will be asked at the outset whether they want a 3 month deferment of the directions, but in this case it will be for referral of the case to PACT or another recognised dispute resolution service. The guidance records that save in exceptional circumstances the FtT will not grant a deferment after the directions have been issued.

Once issued, the standard directions will for the most part provide for the following, in each case the dates running from the date the directions are issued:

1. The landlord is to provide a draft lease within 2 weeks;
2. The parties’ valuers are to exchange measurements of the property and their comparables, and meet to clarify the issues in dispute within 2 weeks;
3. The tenant is to return the draft lease to the landlord with their amendments within 4 weeks;
4. The landlord is to provide the tenant with a list of the terms of the draft lease that remain in dispute within 5 weeks;
5. Statements of agreed facts and disputed issues are to be exchanged and filed within 7 weeks;
6. The filing of a listing questionnaire within 7 weeks;
7. A final hearing to take place in a period beginning 12 weeks and ending 20 weeks from the issue of directions; and
8. Experts reports to be exchanged at least 2 weeks before the hearing date – in other words, approximately within 10-18 weeks after directions are issued.

It will be appreciated that these directions are far more fast paced than those in the County Court, with the fees of the expert’s report being incurred much earlier than they would ordinarily.

The guidance records that, as with residential lease extensions, postponements of the final hearing will rarely be granted simply because terms have almost been agreed or because the parties are still in negotiations, even when the postponement is requested by both parties. Even if a postponement is granted, the guidance specifies that the case will be re-listed for hearing during the six weeks following the original hearing date. There are also sanctions for non-compliance with directions.

It would seem that the days of continual stays of proceedings in unopposed business lease renewal whilst negotiations are ongoing are numbered.

From my experience of residential lease extensions, the fast paced directions and difficulty in obtaining a postponement means that the parties’ attention is focused to reaching an agreed settlement in good time before the hearing. That being said, the cost shifting does not apply in residential lease extensions, so that the successful party is unable to recover their litigation costs unless the other has acted unreasonably. The parties are often therefore persuaded to settle in order to save irrecoverable costs. As costs shifting will apply under the pilot scheme, there may well be in a difference in the attitude of the parties in an unopposed business lease renewal.

A further difference is that the residential lease extension legislation is even more restrictive with regard to the terms of the lease that can be amended by the FtT, which means that the terms to be determined by the FtT are more limited than those in a business lease renewal.

As to whether the pilot scheme will work in light of the above will remain to be seen, but it does seem to me to be an effective way to have unopposed business lease renewals determined in a quick and cost effective manner in circumstances where the parties will have an ongoing relationship.