Business lease — Opposition to renewal on ground of offer of alternative accommodation by claimant landlords — Tenant no longer requiring lease but using proceedings as delaying tactic — Application of section 30(1)(d) of Landlord and Tenant Act 1954 — Claim allowed
The claimants were the freeholders and landlords of a six-storey office building, which they wished to refurbish. The defendants were the partners in a firm of solicitors that occupied several floors of the building under nine different business tenancies, including two of the fifth floor. When the five-year term of the fifth-floor leases expired, the defendants brought claims for new tenancies under Part II of the Landlord and Tenant Act 1954. The claimants opposed those applications on ground (d) of section 30(1), namely a reasonable offer of alternative accommodation, and applied to terminate the existing tenancies. They offered alternative tenancies of the first floor, which had already been refurbished.
The defendants rejected that offer on the ground that it was unreasonable. Further offers, made in response to their objections, were likewise turned down. In the meantime, the defendants decided to vacate the building and entered into negotiations with potential new landlords. They amended their claim for new tenancies to request leases that would terminate six months after they had entered into an agreement for lease of the new premises, or, if that date were not ascertained by the trial, for a 12-month term that would be terminable by them upon six months’ notice. During the trial, the claimants responded with further offers in respect of the first floor. The defendants again rejected the offers, and entered into leases of the new premises.
A preliminary issue was tried as to whether the claimants were entitled to refuse to renew the fifth-floor tenancy on ground (d). The defendants admitted that part of their strategy had been to delay the determination of that issue in order to extend their current tenancies of the fifth floor under section 64 without having to take up new ones. On the ground (d) point, they argued, inter alia, that the alternative accommodation was unsuitable for their requirements because they wished to vacate the premises and because of the open-plan nature of the first-floor accommodation.
Held: The claim was allowed.
(1) Three requirements applied under ground (d), namely that: (i) the landlord should “have offered” alternative accommodation; (ii) the terms were reasonable, having regard to the terms of the current tenancy and all other relevant circumstances; and (iii) the accommodation, at the time at which it would be available, was suitable for the tenant’s requirements, including the “facilities afforded by the holding”. Although the requirement in ground (d) for the landlord to “have offered” alternative accommodation looked to the past, the other elements of the ground relating to reasonableness were all expressed in the present tense. As to (i), the landlord was required to do no more than to offer alternative accommodation before the date of judgment; the reasonableness of any offer so made was to be decided solely at the time of judgment. To require a past offer to have been reasonable at the time at which it was made would be to rewrite ground (d).
(2) As to (ii), although reasonableness was to be determined at the date of judgment, regard was to be had to the current terms. What constituted a reasonable term was not to be determined exclusively by the tenant’s wishes. It was not open to a tenant to say that an offer was unreasonable when in fact it did not want a new tenancy. The defendants’ commitment to vacate the building was not a “relevant circumstance” when they were formally applying for a new tenancy of part of it. Ground (d) had to be applied in the context that a tenant was making a genuine application for a new tenancy, whereas, in the instant case, the application was tactical and the defendants had had no intention of taking up any tenancy that might be granted. Nor did the intention to leave go to the suitability of the accommodation under (iii).
(3) When applying (iii), the relevant holding was that demised to the tenant by the tenancy, and did not include tenant’s fixtures and fittings. Since the individual offices on the fifth floor were not facilities afforded by the holding, and the defendants were obliged to restore the fifth floor to its open-plan condition upon termination of the current tenancies, it was impermissible to compare the two holdings as individual offices, on the one hand, and open-plan, on the other. Accordingly, if the fifth-floor holding was suitable, then the first-floor alternative had to be suitable also. The cost of the move there was insignificant in the light of the defendants’ annual turnover. On the facts of the case, the defendants had continually offered suitable alternative accommodation on reasonable terms, and, accordingly, their opposition to the grant of new tenancies was made out on ground (d).
Michael Driscoll QC (instructed by Herbert Smith) appeared for the claimants; Martin Rodger (instructed by Ince & Co) appeared for the defendants.
Sally Dobson, barrister
