(1)The tenant of a holding to which this Part of this Act applies shall, if a claim for the purpose is made in the prescribed manner—
(i)in the case of a tenancy terminated by notice, within one month after the service of the notice on the tenant; and
(ii)in any other case, not more than thirty-six nor less than twelve months before the termination of the tenancy;
be entitled, at the termination of the tenancy on quitting the holding, to be paid by his landlord compensation for goodwill if he proves to the satisfaction of the tribunal that by reason of the carrying on by him or his predecessors in title at the premises of a trade or business for a period of not less than five years goodwill has become attached to the premises by reason whereof the premises could be let at a higher rent than they would have realised had no such goodwill attached thereto :
Provided that—
(a)the sum to be awarded as compensation for such goodwill shall not exceed such addition to the value of the holding at the termination of the tenancy as may be determined to be the direct result of the carrying on of the trade or business by the tenant or his predecessors in title, and in determining such addition the tribunal shall, if it is proved that the premises will be demolished wholly or partially, or used for a different and more profitable purpose, have regard to the effect of such demolition or change of user on the value of the goodwill to the landlord;
(b)the tenant shall not be entitled to compensation in respect of such goodwill if within two months after the making of the claim the landlord serves on the tenant notice that he is willing and able to grant to the tenant, or obtain the grant to him of a renewal of, the tenancy of the premises at which the trade or business is carried on at such rent and for such term not exceeding fourteen years as, failing agreement, the tribunal may consider reasonable; and if the tenant does not within one month from the service of the notice send to the landlord an acceptance in writing of the offer the tenant shall be deemed to have declined the offer;
(c)in the case of licensed premises the sum payable as compensation for goodwill under this section shall not include any addition to the value of the premises attributable to the fact that the premises are licensed premises;
(d)the tribunal shall, in determining the amount of compensation for goodwill—
(i)have regard to the intentions of the tenant as to carrying on the trade or business elsewhere, and may make it a condition of its award that the tenant shall undertake not to carry on the trade or business within such distance of the premises as may be specified in the award; and
(ii)disregard any value which is attributable exclusively to the situation of the premises;
(e)where the landlord proves that the value of the goodwill has been created or increased owing to restrictions imposed by the landlord, whether by agreement with the tenant or not, upon the letting for a competitive trade or business of other premises in the neighbourhood owned by or under the control of the landlord, the tribunal shall have regard thereto and may refuse the application for compensation or may award a reduced amount of compensation;
(f)compensation under this section shall not be payable if the tenant has determined the tenancy or failed to exercise an option for a further term contained in the lease or in a collateral agreement, unless, in the case of an option, the terms of the option are such that the tenant could not reasonably be expected to exercise it;
(g)where any government department, or a local or public authority, or a charity, or a statutory or public utility company have, in pursuance of the powers contained in the lease, terminated the lease by resuming possession of the premises for the purpose of the department or any other government department, or of the authority, or of the charity, or of the undertaking of the company, or where premises the tenancy whereof has expired by effluxion of time are required for any such purpose no compensation shall be payable under this section.
(2)For the purposes of this section, premises shall be deemed to be used for a more profitable purpose if, but not unless, the rent which the landlord could obtain for the premises if used for that purpose would be greater than the rent which could be obtained if they were used for the purpose of the trade or business carried on by the tenant.
(3)Where an offer of the renewal of a tenancy by the landlord under this section is accepted by the tenant, the rent fixed by the tribunal shall be the rent which in the opinion of the tribunal a willing lessee other than the tenant would agree to give and a willing lessor would agree to accept for the premises having regard to the terms of the lease, but irrespective of the value of any goodwill which may have become attached to the premises by reason of the tenant or his predecessors in title having carried on thereat a particular trade or business.
(4)In the absence of agreement between the parties, all questions as to the right to compensation under this section, and as to the amount thereof, shall be determined by the tribunal.
