Failure to Take Legal Advice Costs Tenant

June 11, 2015

Failure to Take Legal Advice Costs Tenant

In a cautionary tale for any commercial tenant who thinks professional legal advice is an unnecessary luxury, a shopkeeper who would have been entitled to substantial compensation on the early surrender of her lease will go without a penny – after handing back her keys too early.

A local authority compulsorily acquired leases on a parade of shops which it was intent on demolishing and redeveloping. Shortly before that happened, however, the woman sent back her keys and gave up her lease in the 'misguided and ill-advised' belief that her right to compensation would be maintained.

She argued before the Upper Tribunal (UT) that, despite her premature surrender of her rights, she had a legitimate expectation that compensation would be paid to her. However, in rejecting those arguments, the UT found that earlier negotiations between her and the council had been unequivocally 'subject to contract' and that no such contract had ever been concluded.

The UT noted that the council had taken 'merciless advantage' of the shopkeeper's ignorance of the compulsory acquisition process and that its treatment of her had been 'manifestly unfair'. Nevertheless, she had given up her lease voluntarily and the council was strictly within its legal rights to refuse her compensation.