New decision on the indirect protection of the right of occupation of tenants of non-residential premises in the field of real estate law
In March 2022, the Court of Cassation delivered a judgment in case no. T 459-21 relating to the formal conditions established in the interest of tenants of non-residential premises in the event of termination of rental contracts for non-residential premises . The landlord’s notice of termination contained no notice of the tenant’s right to bring the dispute before the Regional Rent and Leases Tribunal for mediation if the tenant did not agree to vacate the premises without compensation. The case concerned the question of whether the right of a tenant of non-residential premises to receive compensation would be considered null and void when the tenant left the premises without entering the dispute after having received a notice of termination containing defects in the shape.
The tenant rented the restaurant premises from the owner. The lessor has notified the termination of the rental agreement for the premises to be vacated at the end of the rental period. The act of termination did not contain any indication that the tenant had the right to appeal to the Regional Court of Rents and Leases if he did not agree to leave the premises without compensation. The tenant left the premises in accordance with the notice of termination without entering the dispute. A few months later, the tenant sued the landlord and claimed compensation of SEK 2.3 million for the damage caused by the termination. The landlord argued that the right to compensation had lapsed because the tenant had left the premises without bringing the dispute before the Regional Court of Rents and Leases.
Brief reminder of the formal conditions and the right to compensation
A notice of termination must contain the conditions the landlord requires to extend the tenancy or the reason the landlord is refusing an extension and a notice that the tenant of non-residential premises has the right to take the dispute to the Regional Rents Tribunal and rentals. within two months if the tenant does not agree to vacate the premises without compensation. If the lessor does not comply with these formalities, the notice of termination is not valid.
Occupancy protection is indirect in the case of rental of non-residential premises. This means that a tenant of non-residential premises is entitled to receive compensation for any damage caused by the obligation to leave the premises if the termination takes place without a legitimate reason. The tenant’s right to receive compensation expires if the landlord has issued a proper notice of termination and the tenant does not submit the dispute to the Regional Rent and Leases Tribunal within the prescribed period.
The judgment of the Supreme Court
The question before the Supreme Court was whether the right of a tenant of non-residential premises to receive compensation expires if the tenant fails to apply to the Regional Rent and Leases Tribunal and vacates the premises while the notice of termination has not been notified to the tenant that the dispute could be referred.
The Court of Cassation first notes that, according to the wording of the legal provisions, in the event of notice of termination containing defects in form, the tenant has the right to remain in the premises since the notice of termination is not valid. In this case, the tenant does not need to enter the Regional Court of Rents and Rentals. The tenant can also choose to leave the premises despite the fact that the notice of termination is not valid. The tenant then decides in this case whether or not to assert the nullity and the lessor cannot subsequently remedy any defect.
The Supreme Court has already noted, in NJA [Nytt Juridiskt Arkiv – New Juridical Archive] 2008p. 85, that a notice of termination devoid of any notification concerning the referral to the Regional Court of Rents and Leases is not remedied either by the tenant of the non-residential premises seizing the dispute before the Regional Court of Rents and leases. The termination notice is also invalid in this case.
In total, according to the Court of Cassation, the lessor is not in a position to protect itself against a claim for compensation from the tenant of the non-residential premises by objecting that the tenant has not referred the dispute whereas the notice of termination of the failed lessor contain any notice to that effect. In this respect, the Supreme Court recalls a general principle of patrimonial law according to which the person who promulgates a decree, in this case a notice of termination, cannot invoke for his benefit the non-compliance with the formal conditions of the decree.
The answer of the Supreme Court to the question examined was therefore that the right of the tenant of non-residential premises to receive compensation continues to exist.
The formal requirements of a notice of termination of a rental agreement for non-residential premises have been considered by the Supreme Court on several occasions. Common to the existing case law is that the court stated that defects of form prescribed in the interest of tenants of non-residential premises cannot be relied upon by the lessor for his benefit, see, inter alia, NJA 1981 p. 675, NJA 1992 p. 829 and NJA 2008 p. 85.
The recent case reported by the Supreme Court confirms the fact that tenancy law offers extensive protection to tenants of non-residential premises. It reiterates once again the importance for an owner to comply with the formal requirements established so that a notice of termination is considered to be correctly drafted.
A notice of termination containing defects in form issued by a lessor is therefore not lifted either by the tenant seizing the Regional Court of Rents and Leases on his own initiative or, as in the judgment which concerns us, by the tenant complying with the notice of termination and leaving the premises. The possibility for the tenant to claim compensation within two years from the release of the premises by taking legal action remains in such a case.