Commercial tenancies - Electing between compensation and the grant of a new tenancy

The Gibraltar Supreme Court handed down an important judgment on 15 April 2025 in the Bahia Caterers Limited v Hepta Limited proceedings. 

Hepta Limited was represented by Sam Marrache (Hassans) and Bahia Caterers Limited by Guy Stagnetto KC and Seth Galia (TSN). 

In what represents the first published judgment from the Supreme Court on the interpretation of section 49 of the Landlord and Tenant Act, Mr Justice Yeats held that on quitting the tenancy the tenant must elect compensation or the grant of a new tenancy. 

Bahia Caterers Limited argued that the company was not under any obligation to elect until such time that it was in receipt of the details of what the alternative tenancy would look like. Hepta Limited on the other hand argued that pursuant to section 49 of the Act (and in this case a Consent Order between the parties) that election had to take place at the point of quitting the tenancy, with any dispute regarding the compensation payable or the details of a new tenancy to be resolved at a later stage. 

The judgment of the Supreme Court provides important clarification in the context of commercial tenancies given that jurisprudence on this area is limited in light of the absence of a section 49 equivalent in English legislation.