The recent case of Flanders Community Centre Limited v Newham London Borough Council has provided us all with a dramatic reminder of how important the role of the expert witness is at trial. Whilst most lease renewal cases don't go to trial, those that do need careful preparation and early instruction of experts to ensure the evidence given stands up to scrutiny.
In this case, the original lease to the Community Centre contained some particularly onerous terms. These terms were definitely not usual in a commercial lease and, because of this, together with the poor state of the building, the rent under the lease was £1. The rent was supposed to rise to £1,200 a year if the tenant did not carry out the necessary repair works within one year. The works were not carried out, but as at lease expiry, the passing rent was still £1.
At trial, the landlord argued for a rent of £16,000 and its expert produced comparable evidence. However, the judge found the evidence to be unreliable, as none of the comparable lease terms were available and the expert did not establish that any of the comparable leases contained onerous terms, let alone terms similar to the Community Centre's lease. The judge ordered the new rent under the renewal lease to remain just £1.
Without any reliable evidence of market rent from either expert, the judge relied on the passing rent. Both sides agreed this was a relevant factor. The weight to be applied to that factor was in the discretion of the judge and, whilst she could have conducted her own analysis, the appeal court found she was not obliged to.
The landlord might have thought it could rely on the fact that one particular onerous term had been dropped from the new lease so it could claim a higher rent but this was not pointed out to the judge, as the landlord's expert had erroneously thought that it was included and counsel did not point it out at trial either. The appeal court found that the judge was entitled to refer to onerous terms generally as a factor in her judgment.
Astonishingly, no one pointed out to the judge that the repair works had not been done either, because again, the experts assumed they had been, since the rent had never been increased to £1,200. It was too late to raise the issue on appeal..
As a result of what look to us to be inadequate preparation of the case and the absence of any evidence to the contrary, the renewed rent was fixed by the judge at the passing rent of £1.
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