A tenant of a business tenancy under Part 2 of the Landlord and Tenant Act 1954 can withdraw into part of the holding in order to defeat a landlord’s ground (f) claim and then expand back into the remainder of the demise before determination of the terms of the tenancy.
This is the effect of the decision of the Central London County Court in Sainsbury’s Supermarkets Ltd v Medley Assets Ltd Case No H00MK414.
Sainsbury’s was the tenant of 329-331 Kentish Town Road, London NW5, from which it operated a supermarket on the ground floor and that of the adjacent property at 333. The upper three floors, formerly offices, and basement were vacant. Medley, the freeholder, terminated Sainsbury’s tenancy relying on the redevelopment ground in section 30(1)(f). Its original plan was to convert the upper floors into flats but at trial its stated plan was to lower the basement floor and widen the staircase from the ground floor to the upper floors to refurbish them for office use. It had the funds and planning permission for both options.
The proposed ground-floor works would have intruded into an area of around 26m2 previously used by Sainsbury’s for stock storage. A week before trial, Sainsbury’s vacated this area.
A tenant is only entitled to a new tenancy of those parts of the demised premises it actually occupies – “the holding” – (section 23). However, a landlord can require a tenant who is not occupying all of the original demise to take a new tenancy of that original demise to avoid being left with unlettable parts which the tenant does not want (section 32(2)).
Medley triggered section 32(2) and argued that references in ground (f) to “the holding” referred to the original demise so that the works to the basement and the vacated part of the ground floor fell within ground (f). The judge decided that the holding was restricted to those parts of the premises actually occupied by the tenant at the trial of the ground (f). Section 32(2) was only engaged when the landlord’s opposition to a new tenancy had failed. Consequently, the proposed works fell outside the holding and ground (f) failed.
Even if the holding had been the original demise, Medley had neither a genuine settled intention to carry out the proposed works nor the ability to do so. The tenant could also have continued to trade from the ground floor even if the basement was lowered and so could rely upon section 31A.
Louise Clark is a property law consultant and mediator
