Tenant awarded £160,000 after lease dispute

Commercial tenants could find it easier to sell on property leases after a High Court judge yesterday awarded “exemplary damages” against a landlord which employed obstructive tactics aimed at allowing it to reclaim premises and let them to someone else at a higher rent.

A company called Design Progression had been frustrated in its attempts to transfer a shop lease in London’s Chelsea by the landlord, Thurloe Properties. Yesterday, it was awarded £160,250 in compensation, in part to cover its losses but including £25,000 in exemplary damages, by Mr Justice Peter Smith.

This is believed to be the first time that exemplary damages have been granted in a case of this type. “It seems to me that it is important to mark the court’s disapproval by a sum which will cause the defendant to consider seriously its future conduct”, said the judge.

In his ruling, the judge noted that the need to obtain a licence to assign [a lease] from a landlord had been “regularly exploited by unscrupulous landlords for their own devices”. But he pointed out that the 1988 Landlord & Tenant Act had been designed to address some of the problems…….

…….Design Progression’s problems began when it tried to sell on the lease on shop space in Fulham Road to Kelly Hoppen, an interior designer. Accordingly, it sought a “licence to assign” from the landlord, a British Virgin Islands company which operates by virtue of a power of attorney granted by an Isle of Man-based lawyer.

But, although multiple references were supplied for the new tenant, the landlord’s agents and solicitors repeatedly requested more information, undertakings in respects of costs, and created other obstacles. In the face of the delays the sale to Ms Hoppen fell through.

The judge found that this had amounted to a “deliberately obstructive policy”.

“Financial Times”: 27.02.04