A recent High Court battle between Dublin Port Company and Automation Transport Limited raised some interesting issues concerning the execution by a business tenant of a renunciation of its legal rights to a new tenancy on expiry of an existing tenancy. Under Landlord and Tenant law, subject to certain exceptions, business tenants who have been in occupation of a property for at least five years are not obliged to vacate the property when their existing lease expires and can claim a new tenancy for a further period of between five and twenty years at market rent.
One of the situations where a landlord can refuse a new tenancy is where the tenant has executed a renunciation of its statutory right. However, for the landlord to be able to rely on the renunciation, the legislation provides that the tenant must have received independent legal advice prior to signing the renunciation.
This case centred mainly around the fact that there were a number of errors in the Deed of Renunciation executed by the tenant and doubt was cast on whether in fact it referred to the premises which was the subject of the case. Ultimately, based on the evidence, the judge was satisfied that the errors were not sufficient to invalidate the renunciation.
The tenant also challenged the Deed of Renunciation on the issue of independent legal advice. Initially, it was claimed by the tenant that no such advice had been received, but it seems it was later conceded that this advice may have been given. Significantly, the judge found that where a tenant signs a document which states that he received independent legal advice, he is bound by the statement even if it is factually untrue. He based this finding on the legal principal known as “estoppel by misrepresentation”. This essentially means that a party to a contract can’t evade his obligations on grounds which arise from a misrepresentation he made to the other party, i.e. he can’t benefit from his own misrepresentation.
This is a significant finding as sometimes tenants sign renunciations containing a statement that they have received independent legal advice even where no such advice was given (perhaps in an effort to save on legal costs). Tenants should be aware that if they sign such a document, they will not be able to claim at a later date that they are not bound by it on the grounds that no such advice was actually received.
For landlords, the case merely reinforces the importance of:-
(a) ensuring that a renunciation is signed by a tenant if the landlord wants to avoid statutory renewal rights accruing;
(b) insisting that the tenant obtain independent legal advice (even where the tenant does not wish to seek such advice);
(c) insisting that the tenant provide written confirmation of having received independent legal advice; and
(d) where possible, getting confirmation from an identified legal adviser that such advice has been given.