In the recent case of S Franses Limited v Cavendish Hotels (London) 2018, a landlord’s attempt to oppose renewal of a 1954 Act tenancy failed where the scheme of redevelopment had been contrived as a mechanism to satisfy Ground 30(1)(f) of the Act.
The Landlord and Tenant Act 1954 confers qualified security of tenure on business tenants. In simple terms, a tenant can serve notice and apply to the Court for a grant of a new tenancy. The landlord can oppose this on seven grounds in Section 30(1) of the Act.
In the Cavendish Hotels’ case the tenancy comprised the ground floor and basement of 80 Jermyn Street, London. The tenant specialised in dealing in antique tapestries and textiles the remainder of the building being occupied by the landlord as a hotel.
The tenant served notice requesting the grant of a new tenancy and the landlord served a counter notice opposing this under Section 30(1)(f).
Section 30(1)(f) enables a landlord to oppose a new tenancy if the landlord intends to demolish or reconstruct the premises.
Stated Purpose Was To Remove Tenant
The Supreme Court was asked to determine whether a landlord can avail themselves of Ground (f) where the works have no purpose other than to get rid of the tenant and would not be undertaken if the tenant were to leave voluntarily.
The works proposed by the landlord were sufficiently substantial and disruptive that they could not be carried out whilst the tenant remained in occupation but did not require planning permission. The final scheme was described by the Judge at first instance as ‘designed with the material intention of undertaking works that would lead to the eviction of the tenant regardless of the works commercial or practical utility and irrespective of the expense’.
The scheme relied on at trial created two retail units one of which could only be accessed through the other. It included artificially lowering the floor slab which was described as objectively useless, pointless repositioning of smoke vents and demolition of an internal wall only for it be replaced with a similar wall in the same place. The estimated cost of the scheme was just under £800,000.
It was common ground between the parties the proposed works had no practical utility.
The landlord gave a written undertaking to the Court to carry out the work if a new tenancy were refused.
The landlord openly accepted the sole purpose of the works was to get vacant possession and further that the works would not be done if the tenant left voluntarily.
Genuine Intention to Undertake Works
At first instance on the preliminary issue as to the application of Section 30(1)(f) the Court found a genuine intention to undertake the work and that the landlord was practicably able to do so and as a consequence refused the new tenancy. On appeal to the High Court this decision was upheld. The case then went on leapfrog appeal to the Supreme Court and the decision was handed down at the end of last year.
Conditional Intention Proved Fatal
The Supreme Court held that the landlord’s intention to demolish or reconstruct must be independent of the tenant’s claim for a new tenancy and not conditional upon it. A conditional intention did not satisfy Ground (f). If part of the work was conditional and part unconditional, the extent of the works falling in each category would be relevant. The fact the landlord would not do the work if the tenant left voluntarily meant the landlord’s intention was conditional. This did not satisfy Ground (f) – the intention must be fixed and in no way conditional.
The landlord’s motive or purpose may be investigated as evidence of genuineness as to intention to undertake the work. Although Ground (f) does not depend on objective utility of the works, a lack of utility of the intended work may allow an inference to be drawn as to the conditional nature of the landlord’s intention.
The Supreme Court upheld the tenant’s appeal and found the landlord did not have the requisite intention within the meaning of Section 30(1)(f).
Landlords designing similar schemes should be careful as the Court will closely examine their true intention. The purpose/motive for the scheme does not matter save to inform the conditionality of intention which does matter. Tenants may now more closely examine any redevelopment plans.
For more information please contact Sarah Payne.
Disclaimer: While we do all that is possible in terms of ensuring its accuracy, this blog contains general information only. Nothing in these pages constitutes legal advice. You need to consult a suitably qualified lawyer from the firm on any specific legal problem or matter.
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