Legal News | 13.01.26

McDonald’s v Shirayama: A Wake-Up Call for Landlords and Tenants Alike

If you’re a landlord considering opposing a lease renewal or a tenant wondering what happens if your landlord takes a firm stance, this recent High Court decision is worth your attention. The case of McDonald’s Restaurants Ltd v Shirayama Shokusan Co Ltd [2024] EWHC 1133 (Ch) shows how things can go wrong when intentions aren’t genuine.

This judgment is a clear reminder: the courts take honesty very seriously. If you’re a landlord opposing renewal under ground (g), you need a genuine, settled intention and not just a plan on paper.

The Case

McDonald’s occupied a prime spot in London’s former County Hall building under a protected commercial lease. When the lease was nearing its end, McDonald’s sought renewal under the Landlord and Tenant Act 1954 (LTA 1954), legislation that gives business tenants the right to renew unless the landlord can prove specific grounds for refusal.

The landlord, Shirayama, opposed renewal under section 30(1)(g), claiming they intended to use the premises for their own business. They presented detailed plans for a Japanese restaurant called Zen Bento, complete with architectural designs, a proposed head chef, and an undertaking to start trading promptly. The court accepted this and refused McDonald’s renewal. McDonald’s vacated in March 2019.

The Twist

After leaving, McDonald’s discovered Zen Bento never opened. In fact, Shirayama hadn’t even decided what to do with the space. McDonald’s challenged this under Section 37A of the LTA 1954, which allows tenants to claim compensation if a landlord misrepresents its intentions to the court.

The High Court found Shirayama had misled the court in 2018. Those detailed plans weren’t backed by a genuine, settled intention. As a result, Shirayama was ordered to pay substantial compensation under Section 37A. McDonald’s also claimed deceit, but that part didn’t succeed. The court concluded Shirayama hadn’t intended McDonald’s to rely on the misrepresentation. Still, the financial consequences were significant.

Why Does This Matter?

For landlords:
If you’re opposing a lease renewal under ground (g), make sure your plans are real and ready to implement. Speculative ideas or “we’ll figure it out later” approaches can lead to costly consequences.

For tenants:
This case highlights Section 37A as a valuable safeguard if you suspect your landlord wasn’t upfront with the court. If something feels off, seek advice early.

The takeaway is simple: honesty isn’t just the best policy – it’s the only policy when it comes to lease renewals.

This article is for general information only and does not constitute legal advice. Please contact our Dispute Resolution team at disputes@wansbroughs.com | 01380 733300.