Business Tenancies: Opposed Lease Renewals - Landlord's Intention To Occupy

Humber Oil Terminals Trustee Limited v Associated British Ports [2011] EWHC 2043 (Ch) 1187

The facts

This case concerned four leases of properties forming part of the Immingham Oil Terminal in the Humber Estuary, the busiest port in the UK (by volume). Each year, about 20 million tonnes of oil and related products pass though Immingham to and from two local refineries, the Lindsay Oil Refinery and the Humber Oil Refinery, each owned and operated by a large oil company.

The owners of the refineries together operated a joint venture company known as Humber Oil Terminals Trustee Limited ("HOTT"), the tenant and claimant in these opposed business lease renewal proceedings.

The landlord's case

The landlord, Associated British Ports ("ABP"), served section 25 notices terminating the leases and indicating an intention to oppose any application by HOTT for the grant of new tenancies under section 30(1)(g) of the Landlord and Tenant Act 1954.

ABP explained that the Immingham Oil Terminal was the most advantageously located facility for deepwater access for oil tankers, that HOTT's exclusive use of the terminal was the only such arrangement within the Port of Immingham, and that it was not operating the terminal efficiently. ABP's case was that it wished to occupy and manage the Immingham Oil Terminal itself to maintain supply to the refineries and to open the oil jetty, demised to HOTT under one of the leases, to third party users. If the leases were renewed, the landlord proposed that the combined annual rents should increase from £4.2 million to £23.7 million.

The tenant's case

HOTT applied to the court for the grant of new tenancies under the 1954 Act. HOTT argued that ABP could not prove its required intention under section 30(1)(g) and pointed out that on termination of the leases, HOTT would be entitled to remove its complex system of pipes, equipment and infrastructure from the oil jetty, which would cost around £10 million. It would then cost at least £60 million and about two years to replace what had been removed.

Decision

The court found on the facts that ABP's intention was to occupy the Immingham Oil Terminal for the purposes, or partly for the purposes, of a business to be carried on by it at the Immingham Oil Terminal at the termination of the leases.

The court took the view that the parties would be guided only by economics and commercial reality and that it was not only possible, but quite probable, that the tenant would come to a...