We asked Chris Hovington, Group Leasing Manager at Praxis Real Estate Management to sit down with us and talk about working alongside the teams at Sherrards.

Thanks to Chris for taking the time to speak about our Commercial Property teams whom he has worked with for over twenty years.

He says, “We work with Sherrards as often as we can.”

We say “The feeling is mutual!”

Erin, a trainee solicitor in our Dispute Resolution team, explores the recent judgment in BMW (UK) Ltd v K Group Holdings Ltd highlighting the balancing act required in respect of a landlord’s business aspirations and a commercial tenant’s rights when negotiating break clauses in a lease.

Introduction

The realm of commercial leases is a complex landscape governed by legal provisions aimed at balancing the interests of both landlords and tenants.

One such provision that plays a pivotal role in commercial lease agreements is the break clause.

Break clauses in a commercial lease are provisions that allow either the tenant or the landlord to terminate the lease before its designated end date. These clauses offer flexibility within the lease agreement, allowing parties to adapt to changing circumstances or business needs.

However, a recent decision in the County Court highlighted the difficulties that landlords can face when seeking a break clause for their business needs in a renewal lease protected by Part II of the Landlord and Tenant Act 1954 (the Act).

BMW (UK) Ltd v K Group Holdings Ltd

The case concerned a car showroom in Mayfair, demised under four separate leases from the landlord, K Group Holdings Limited, to the tenant, BMW (UK) Limited.

These leases were subject to renewal proceedings under the Act and therefore, were to be granted on essentially the same terms as the previous leases.

The previous leases did not, however, contain a landlord break option. Accordingly, the onus was on the landlord to demonstrate the proposed terms were fair and reasonable and should be granted. 

If a break clause was to be included, the landlord accepted that it would have to prove a ground of opposition under s30(1) of the Act in order to exercise the break option.

HHJ Monty KC, in considering whether to grant a break clause, made it clear that the court must try and strike a balance “between granting a reasonable degree of security to the tenant on the one hand, and not preventing the landlord from recovering possession if one of the statutory grounds can be proved on the other”.

Section 30(1)(g) – Landlord’s intention to occupy the premises for the purpose of a business to be carried on by the landlord

The relevant ground in this case was ground (g), namely that on termination of the tenancy, the landlord intends to occupy the property for the purposes of a business to be carried on by the landlord.

The renewal leases themselves were unopposed and so it was for the landlord to prove that they would be able to establish ground (g) at some point in the future when exercising the break option. That is, the landlord needed to show a bona fide intention to operate the break clause if one was granted.

When giving evidence, the landlord agreed that a car business would be an entirely new business for K Group Holdings Ltd. It was further contended by the landlord’s witness that members of his family who controlled entities within the same group as the landlord were only a “little bit inclined to have a study and see the possibilities” of the electric car market. 

In this case, the landlord’s inadequate evidence and the effect the break clause would have on the tenant meant that the court found in favour of the tenant in refusing the inclusion of the landlord’s proposed break clause.

Practical considerations

This decision highlights the raising of the bar in respect of the landlord’s intention to exercise a break option, particularly where the landlord may have aspirations to start a new business venture or expand an existing one.

A landlord should ensure they can evidence a real intention that the operation of the break clause is more than a vague possibility. Therefore, evidence of any steps taken to progress the possibility of occupation for the purpose of a business would be worth documenting.

Although a complete and comprehensive business plan may not be required, the landlord should seek to substantiate any request for a break clause with supporting evidence detailing any “genuine and workable” intention to occupy the premises.

Sherrards’ Real Estate Litigation team

This article has been fact-checked and authorised by the Head of the Real Estate Litigation team, and Training Partner Michael Lewis. If you have any questions or thoughts, please reach out to him by clicking here.

Our Real Estate Litigation team can support you with an entrepreneurial, commercial and considered approach to break options to help you achieve your goals. Our specialist team can advise you on your options, including, where appropriate asking the court to determine the matter.

For advice and assistance, contact the Real Estate Litigation team at Sherrards.

We asked Jon Hussey, Director of Financial Planning at Lumin Wealth Management to sit down with us and talk about working alongside the teams at Sherrards.

Jon kindly played ball and also left us a glowing review!

“[Alasdair] has a good professional team around him, which makes things easy.”

Here, Jon talks about our Managing Partner Alasdair, their long relationship, and the Commercial Property teams who have supported Jon, his business, and its clients for nearly thirty years.

To find out more about Lumin Wealth, please click here.

We asked Prem Shergill, IFA at Grosvenor Wealth Management, to speak to us about how the Sherrards Private Client team supports her and her clients.

Prem kindly shares how her clients are often referred to our Private Wealth teams to help her clients to protect their assets.

She says “Everyone at Sherrards is very friendly, professional and full of knowledge and expertise.”

To find out more about Prem and Grosvenor Wealth Management, please click here.

Dan kindly played ball and also left us a glowing review! “With Sherrards, there’s no pretence, you get a great responsive service.”

Here is Dan talking about our Commercial Property team who have supported Dan and his ventures.

Recently our Corporate and Commercial and Employment team supported Dan with his recent venture and the acquisition of Soho Sandwich Company. You can read about that by clicking here.

We asked Anne-Maree Dunn, Client Partner and Head of Tax at WMT to sit down with us and talk about working alongside the teams at Sherrards. This comes as part of our client testimonial video project to showcase the Sherrards teams, the people we support and how we support them.

Anne-Maree advises business owners and individuals on tax opportunities and challenges and works closely alongside many of the team from Sherrards including our Corporate and Commercial, Commercial Property, Employment, Residential Property and Private Wealth teams.

These videos were filmed by Pearldrop Video Production at The Hub on Verulam.

To find out more about WMT and Anne-Maree Dunn, click here.

The obvious theme being the ‘dismissal’, and the fact that employment is ending or has ended. However, in many cases, those concepts are used interchangeably as if they all represent the same claim, yet they are all very distinct and separate claims that have to be considered against the applicable legal principles. A bit like an Urban dictionary, we will tell you what they really mean…

Summary Dismissal

This one is easy – a summary dismissal is a dismissal of an employee without any notice (and without paying them any notice either). Thus, it is quite common in cases of gross misconduct for the employee to be summarily dismissed. 

 

Wrongful Dismissal

This is a breach of contract claim, namely that the employer has dismissed the employee in breach of the terms of the employment contract.

If the employment contract provides that the employee is entitled to 3 months’ notice on termination, but the employer only gives 2 months’ notice, then this will give rise to a wrongful dismissal claim. It is a contractual claim, and the employee will point to the fact that they have suffered loss – 1 month’s loss of salary and benefits.

Often this claim is pursued when the employer terminates without any notice (see summary dismissal above), but the employee contends that the employer did not have grounds to terminate without notice. This claim is not concerned with the fairness of the procedure followed; it is simply an anaylsis of whether the employer has breached the employment contract.

This claim can be pursued in the Employment Tribunal but a cap of £25,000 applies on the value of that claim. Thus, if the wrongful dismissal claim is worth more than £25,000, it may need to be pursued in the High Court.

 

Unfair Dismissal

To bring a standard unfair dismissal claim, the employee needs 2 years continuous service with their employer. No such service requirement exists for wrongful dismissal claims.

If an employee has more than 2 years of continuous service and is dismissed by their employer (irrespective of whether notice was given), they can claim that they have been unfairly dismissed.

The Employment Tribunal will consider three key issues. Firstly, did the employer have a potentially fair reason to dismiss the employee. There are currently 5 recognised potentially fair reasons – capability, conduct, redundancy, breach of a statutory duty or restriction, and some other substantial reason. The dismissal must be for one of those reasons. Secondly, the Tribunal has to be satisfied that the employer followed a fair procedure in reaching the decision to dismiss and thirdly, that the employer acted reasonably in treating that reason as sufficient to warrant dismissal.

Thus, this claim is not about notice; it is about the fairness of the dismissal and will involve an analysis of the reason for dismissal, the procedure followed and whether the decision to dismiss was reasonable. 

 

Constructive Dismissal

The fundamental principle of a constructive claim is that the employee has resigned, as opposed to the employer expressly dismissing them. Note that like an unfair dismissal claim, the employee needs 2 years of continuous service with their employer to pursue a constructive dismissal claim.

In many cases, the employee will resign without notice, but equally, claims can be pursued even if the employee works their notice following their resignation. The employee typically argues that they are resigning either in response to a repudiatory breach of their employment contract by the employer (an express or implied term) or that the employer has engaged in cumulative conduct over a period, resulting in a ‘final straw’ incident, leaving them no choice but to resign.

There is much case law on examples of successful constructive dismissal claims, which can include reductions to, or non-payment of, salary or where the employer has breached trust and confidence.

In essence, the employee has to prove that they have been dismissed ‘constructively’ by their employer. If they are able to overcome that burden, then the Employment Tribunal will consider the fairness of the ‘dismissal’. 

All clear…well, brace yourselves…it is possible for an employee to be summarily dismissed (for say gross misconduct), who then alleges that they were unfairly dismissed (because, for instance, they do not believe the employer followed a fair process in dismissing them) and also alleges that they were wrongfully dismissed (on the basis that the employer did not have grounds to terminate without notice)…

We like to keep things straightforward at Sherrards; we cannot say the same for the law.

 

We asked Geoff Kent, Managing Director of Kent Family Nurseries Ltd to sit down with us and talk about working alongside the teams at Sherrards.

Geoff kindly played ball and also left us a glowing review! So, enjoy!

Here is Geoff talking about our Corporate, Employment, Immigration, and Commercial property teams who have supported Geoff and his business for coming up to ten years.

Spear’s is a multi-award-winning wealth management and luxury lifestyle media brand. The legal rankings they create are brought together by peer nominations, client feedback and interviews as well as research gathered by the Spear’s editorial team and are developed to help their readers make wise choices when it comes to their wealth.

Matthew Ball, Partner in the Litigation department at Sherrards and Head of the Classic and Supercar specialism was ranked alongside just five other ‘Top recommended’ Classic Car lawyers within the UK.

Matthew says “My colleague Jonathan Silverman and I have developed this specialism at Sherrards to support our clients with their cars, whether they are purchasing their first classic or supercar, adding to their collection, selling, or whether they need commercial advice on restoration. It is our passion, both commercially and personally, and I am very grateful to the Spear’s team for being recognised alongside such talent.”

Jonathan Silverman and Matthew Ball have many years of experience in assisting with legal matters relating to classic and supercars (alongside other high-value assets). If you would like to speak to Matthew or a member of our Classic and Supercar department, please contact him on the details below.

Firstly, we welcome Guy Morgan who joins us as Partner in our Commercial Property team. Guy specialises in banking and finances, and health and social care. He will also help to build up our international offering by supporting our French and German desks and joins our London office.

We also welcome Arthur Byng-Nelson, Legal Director, who will head up the newly formed Sherrards’ Art and Heritage Property team. Arthur joins our growing Private Wealth department and will be based in our London office.

Promotions

Shane Knight joined our Commercial Property team as a Senior Associate and has now been promoted to the Partnership. His client base includes property developers, offshore commercial interests with property investment portfolios, in addition to a range of clients from the charity sector.

Not only does Shane provide strength to our Commercial Property team, he also leads our German Desk, strengthening our international offering.

In the Litigation team, Greg Pooler has been promoted from Senior Associate to Legal Director. Greg’s experience stretches across several industries, where he has developed a joined specialism in cross-border disputes and international fraud. He has participated in numerous high-profile international cases and has established himself as an all-round excellent lawyer.

Recently, Greg spoke on behalf of the Firm in conjunction with Alliott Global Alliance at a Crypto conference in Mauritius and is developing this niche specialism at the Firm.

Emma O’Meara originally joined the firm as a consultant before engaging full-time as an Associate for the Employment team. She has quickly become the go-to lawyer for clients and referrers alike, with her pragmatic approach and commercial solutions. We are delighted to share the news that Emma has been promoted to Senior Associate.

Shen Hussein remains an integral part of our Residential Real Estate team. Based in our St Albans office, Shen has also been promoted to Associate level. Clients say they cannot recommend her enough and we tend to agree.

George Faulkner has been promoted to Associate level and is an integral part of the Real Estate Litigation team. George is eager to build strong relationships with his clients, which is reflected by the results and feedback received.

 Aisling Kelly has also been promoted to Associate level in our Private Wealth team. She specialises in wills and lasting powers of attorney, as well as estate planning. Aisling has been instrumental in a number of business development initiatives at Sherrards and is a firm favourite of clients. They say she is friendly, charming and efficient. We would not argue with that.

Piers Fransman has been promoted to Senior IT Analyst. Piers is our on-hand IT expert and in his short time with us he has proven himself to be extremely capable, helpful and kind. We are delighted to announce his promotion to Senior IT Analyst.

Abby Cowan and Harriet Lindo both started at Sherrards in August 2021 as Apprentices. Through their dedication and hard work, we are absolutely thrilled that they are both staying on board and have been promoted to Marketing Assistant and Front of House Assistant, respectively.

Managing Partner Alasdair McMillin says, “It is great to see so many new faces at Sherrards, and also celebrating those in the team who have received very well-deserved promotions. We look forward to welcoming a number of new people to the team over the coming months as we continue on our growth strategy.”