Business tenancy — Grounds for opposing renewal — Judge holding that landlord not entitled to oppose grant of new lease on ground of intention to demolish or reconstruct premises or carry out substantial work of construction — Whether removal and replacement of partition walls amounting to such work — Section 30(1)(f) of Landlord and Tenant Act 1954 — Appeal dismissed
The respondents ran an hotel, which they held on a 12-year business lease that was due to expire in March 2001. They claimed a new tenancy under the Landlord and Tenant Act 1954, but the appellant landlord maintained that it was entitled to refuse upon ground (f) in section 30(1) of the 1954 Act. The appellant’s planned works, for which it had planning permission, were aimed at upgrading the hotel from a two-star to a four-star establishment. Instead of the existing 60 bedrooms, most of which had handbasins but no en suite facilities, it intended to create 38 bedrooms with en suite bathrooms. It proposed to do this by removing stud partition walls (mostly non-load-bearing), subdividing the original rooms, and installing new rooms to create the en suite facilities. Some works were also planned to the basement, where the kitchen was situated, and a lift was to be installed. The respondents accepted that the works could not be done while they were in occupation, but they disputed whether the works amounted to the demolition or reconstruction of a substantial part of the holding, or the carrying out of substantial construction works, as required under ground (f).
On the trial of a preliminary issue, the judge held that ground (f) had not been made out. In doing so, he took the view that the structural works were not sufficient to affect a substantial part of the premises. He considered that the removal and replacement of non-original party walls, even those that had come to have some load-bearing qualities, did not affect the essential structure of the building so as to require those works to be taken into account in that regard. The appellant appealed.
Held: The appeal was dismissed.
1. Ground (f) contained two limbs, namely whether the landlord intended to: (i) demolish or reconstruct the premises comprised in the holding, or a substantial part of those premises; and (ii) carry out substantial works of construction on the holding or part thereof.
2. The correct approach to the first limb was to identify the components in the proposed works that in some way affected the structure of the building, either internally or externally, and to consider them in conjunction with any works that did not affect the structure but were ancillary to works that did: Barth v Prichard [1990] 1 EGLR 109 and Percy E Cadle & Co Ltd v Jacmarch Properties Ltd [1957] 1 QB 323 applied. The judge could not be said to have erred in law in considering that the removal of partitions, and the installation of new ones, did not amount to reconstruction within the first limb of section 30(1)(f).
3. On the second limb, the judge had been entitled to find that the removal of some partitions and the installation of others were not works affecting the essential structure of the building, and that they did not therefore amount to “substantial work of construction on the holding or part thereof”. He had also been entitled to find that other planned works of a structural nature were not “substantial” in the context of the physical extent of the premises and the appellant’s overall proposals.
4. In essence, the decision on ground (f) had been one for the judge at first instance: Bewlay (Tobacconists) Ltd v British Bata Shoe Co Ltd [1959] 1 WLR 45, Percy E Cadle, Cook v Mott (1961) 178 EG 637 and Romulus Trading Co Ltd v Henry Smith’s Charity Trustees (No 1) [1990] 2 EGLR 75. It had been a decision in the nature of an evaluation, with which the appellate court should be slow to interfere: Assicurazioni Generali SpA v Arab Insurance Group (BSC) [2002] EWCA Civ 1642; [2003] 1 WLR 577, Percy E Cadle and Ransom (Inspector of Taxes) v Higgs [1974] 1 WLR 1594 considered.
James Thom (instructed by Howard Kennedy) appeared for the appellant; Anthony Tanney (instructed by Gouldens) appeared for the respondents.
Sally Dobson, barrister
