London borough wins High Court dispute with tenants over railway arch rent

The London Borough of Hackney has won a lengthy dispute with former and current tenants over the rent charged for use of a railway arch.

In Rail for London Ltd & Anor v London Borough of Hackney [2022] EWHC 2929 HHJ Claire Jackson, sitting as a judge of the High Court, found for Hackney in its dispute with Rail for London - part of Transport for London (TfL) - by substituting an alternative wording for one clause.

TfL last May failed to have Hackney’s defence of the £6m claim struck out.

Various leases existed for the arch and in 2019 TfL told Hackney that the surrender of a lease meant rent was no longer payable, and it sought recovery of the basic rent paid since the surrender. Hackney refused and asserted basic rent remained due and payable.

Leases C and D were granted in 1996, and after a complex series of transactions in November 2003 Lease D was surrendered for £7,788,500.

RfL became tenant under Lease C in 2009 and until September 2019 continued to pay rent.

In December 2019, TfL asserted that as a result of the lease surrender, no basic rent had been due after that and sought repayment of around £6m paid during the intervening period. Hackney disagreed and TfL issued proceedings.

HHJ Jackson noted in her judgment: “At the heart of the dispute is [TfL’s] contention that, because of the surrender of Lease D, the ‘basic rent’ that is payable to [Hackney] under the terms of Lease C is, and will remain for the term of Lease C, nil. The parties have been unable to resolve this dispute.”

She said she had been asked to decide whether TfL has an ongoing liability to pay basic rent or had this obligation ended when the lease was surrendered in 2003.

TFL argued that Hackney’s case called for the reading into the lease of an entire new subclause.

HHJ Jackson said: “In my judgment the addition of a whole new subclause in this case goes well beyond the court construing the lease…in my judgment this is too extreme a process for the court to undertake, even on an iterative construction, of an unambiguous clause.”

But she said the test for implying an implied term into the lease had been met and implied that ‘basic rent’ means ‘for each relevant year’ and “where the underlease is determined the sum that is received by the tenant ascertained in accordance with the provisions of the underlease (including its definition of basic rent) with all necessary modifications”.

The judge concluded: “I therefore dismiss the claimants' case and grant the defendant's case to the extent of making a declaration that the term set out…hereof is an implied term of Lease C.”

Mark Smulian