In March 2022, the Supreme Court handed down a judgment in Case No T 459-21 which is relevant to the formal requirements established in the interests of tenants of non-residential premises in the case of termination of rental agreements for non-residential premises. The landlord’s notice of termination did not contain any notification of the tenant’s right to refer the dispute to the Regional Rent and Tenancies Tribunal for mediation if the tenant did not agree to vacate the premises without compensation. The case dealt with the question of whether the right of a tenant of non-residential premises to receive compensation would be considered to have lapsed when the tenant vacated the premises without referring the dispute after receiving notice of termination that contained formal defects.
Background
The tenant rented restaurant premises from the landlord. The landlord gave notice of termination of the rental agreement for the premises to be vacated at the end of the rental period. The document giving notice of termination contained no information on the fact that the tenant had a right to refer the dispute to the Regional Rent and Tenancies Tribunal if the tenant did not agree to vacate the premises without compensation. The tenant vacated the premises in accordance with the notice of termination without referring the dispute. A few months later, the tenant brought an action against the landlord and claimed compensation of SEK 2.3 million for damage caused by the termination. The landlord argued that the right to compensation had lapsed because the tenant had vacated the premises without referring the dispute to the Regional Rent and Tenancies Tribunal.
A brief account of the formal requirements and the right to compensation
A notice of termination must contain the conditions the landlord requires in order to extend the tenancy or the reason why the landlord refuses an extension and notification that the tenant of non-residential premises has a right to refer the dispute to the Regional Rent and Tenancies Tribunal within two months if the tenant does not agree to vacate the premises without compensation. If the landlord fails to comply with these formal requirements, the notice of termination is invalid.
The protection of tenure is indirect in the case of rental of non-residential premises. That means that a tenant of non-residential premises is entitled to receive compensation for any damage caused by being forced to vacate the premises if the termination takes place without a legitimate reason. The tenant’s right to receive compensation expires if the landlord has issued notice of termination that is correct in formal terms and the tenant does not refer the dispute to the Regional Rent and Tenancies Tribunal within the prescribed period.
The Supreme Court judgment
The question at the Supreme Court was whether the right of a tenant of non-residential premises to receive compensation expires if the tenant fails to refer the dispute to the Regional Rent and Tenancies Tribunal and vacates the premises when the notice of termination failed to notify the tenant that the dispute could be referred.
The Supreme Court initially notes that, according to the wording of the legal provisions, in the case of a notice of termination that contains formal defects, the tenant is entitled to remain in the premises since the notice of termination is invalid. In that case, the tenant does not need to refer the dispute to the Regional Rent and Tenancies Tribunal. The tenant may also choose to vacate the premises despite the fact that the notice of termination is invalid. The tenant thus decides in this case whether or not to enforce the invalidity and the landlord is unable to remedy any defect subsequently.
The Supreme Court has previously noted, in NJA [Nytt Juridiskt Arkiv – New Juridical Archive] 2008 p. 85, that a notice of termination which lacked any notification concerning referral to the Regional Rent and Tenancies Tribunal is also not remedied by the tenant of the non-residential premises referring the dispute to the Regional Rent and Tenancies Tribunal of its own accord. The notice of termination is also invalid in that case.
All in all, according to the Supreme Court, the landlord is unable to protect itself against a claim for compensation from the tenant of the non-residential premises by objecting that the tenant did not refer the dispute when the notice of termination from the landlord failed to contain any notification to that effect. With regard to this, the Supreme Court refers to a general principle of property law that the person issuing a decree, in this case a notice of termination, cannot cite non-compliance with formal requirements for the decree to its own advantage.
The Supreme Court’s response to the question examined was therefore that the right of the tenant of non-residential premises to receive compensation continues to exist.
Comments
The formal requirements for a notice of termination of a rental agreement for non-residential premises have been examined by the Supreme Court on several occasions. What is common to the existing case law is that the court has stated that defects in formal requirements prescribed in the interests of tenants of non-residential premises cannot be cited by the landlord to the landlord’s advantage, see, inter alia, NJA 1981 p. 675, NJA 1992 p. 829 and NJA 2008 p. 85.
The recently-reported court case from the Supreme Court confirms the fact that rental legislation provides extensive protection for tenants of non-residential premises. It reminds us once again of the importance for a landlord of complying with the established formal requirements in order for a notice of termination to be considered to be correctly worded.
A notice of termination containing formal defects issued by a landlord is therefore not remedied either by the tenant referring the dispute to the Regional Rent and Tenancies Tribunal on the tenant’s own initiative or, as in the ruling with which we are concerned, by the tenant complying with the notice of termination and vacating the premises. The tenant’s ability to claim compensation within two years of vacating the premises by bringing an action continues to exist in such a case.
